Local MFs outpace foreign players in asset growth

Domestic mutual fund houses are back with a bang. Last year, the growth in their assets under management (AUM) not only outpaced the growth in the assets of their foreign counterparts, but also surpassed the overall industry’s asset growth.

In 2010 and 2011, foreign mutual fund houses had recorded better growth in AUM.

Industry observers say last year’s trend indicates Indian investors are more comfortable with local names than foreign brands.

In 2012, Indian banks’ mutual fund ventures, fund houses sponsored by Indian institutions (UTI and LIC MF) and private domestic companies recorded a rise in their assets. While the industry’s asset grew 15.4 per cent (from Rs 6.81 lakh crore to Rs 7.86 lakh crore), the assets of domestic companies rose 16.7 per cent. Foreign mutual fund houses saw growth of only 5.5 per cent in their assets.

Together, IDBI MF and UTI MF recorded growth of about 20 per cent in assets, while SBI MF, Canara Robeco MF, Union KBC MF and Bank of India AXA MF reported a rise of 30 per cent in their collective assets.

Several foreign mutual funds saw a decline in assets. These include ING MF, Daiwa MF, BNP Paribas MF and Pramerica MF. Foreign funds that performed better than their peers included JP Morgan AMC, Goldman Sachs and Morgan Stanley.

Last year, two foreign funds were merged with domestic companies — while L&T MF acquired Fidelity’s Indian assets, AXA joined hands with Bank of India after Bharti exited the joint venture. However, in 2012, even as the benchmark stock indices gave absolute returns of about 25 per cent, the funds industry couldn’t rope in retail investors in the equity segment.

Income and gilt funds, however, performed well. According to the Association of Mutual Funds in India, in the April-December period, a whopping Rs 69,853 crore of fresh money flowed into the income category; in the year-ago period, Rs 5,421 crore had flowed out of the segment.

Gilt funds (which primarily invest in government securities) saw interest pile up through the year, as inflows into the category in the quarter ended December touched their highest in several years. Overall inflows in gilts stood at about Rs 2,500 crore, against a net outflow of Rs 506 crore in the year-ago period.