Mid-sized MFs outpace majors in first quarter

Institutions and firms allocating larger quantum of funds in debt segment.

Mid-sized domestic fund houses outpaced the industry's top majors in building assets in the June quarter. This is due to the shift in allocation of funds by institutions in smaller players and fixed maturity plans (FMPs), that led to a burgeoning corpus in their debt category.

SBI MF, IDFC MF, Tata MF, Deutsche MF and Kotak Mahindra MF, which manage between Rs 10,000 and Rs 50,000 crore, witnessed their assets under management rise by as much as 35 per cent. At a time when the assets’ growth rate for the top five players is below 10 per cent, players in the second rung are riding on a higher growth trajectory.

Even in the previous financial year (2010-11), when the industry’s overall assets fell by a little over six per cent, and the three top players got a worse hit, mid-sized ones managed a comparatively better performance.
 

GROWING BIG
Table 1: Growth in average AUM in June quarter compared with March quarter TOP FIVE PLAYERS
Fund House	Average AUM	Growth (%)
Reliance	1,01,259.33	-0.31
HDFC	92,032.91	6.66
ICICI Prudential	79,758.72	8.57
UTI	69,105.09	2.85
Birla Sun Life	67,475.16	5.93
MID-SIZED PLAYERS
SBI	47,874.46	14.88
IDFC	27,848.61	32.49
Tata	25,006.17	10.25
Deutsche	11,083.54	35.39
Kotak Mahindra	33,993.54	5.56
Source: Association of Mutual Funds in India, compiled by BS Research Bureau
Table 2: Rise in debt assets TOP FIVE PLAYERS
Fund House	Absolute change

Growth (%) Reliance218.760.37 HDFC3914.049.59 ICICI Prudential7257.5413.62 UTI1749.274.92 Birla Sun Life3742.547.65 MID-SIZED PLAYERS SBI 6458.3127.43 IDFC6449.1239.41 Tata2464.9715.16 Deutsche2910.2038.48 Kotak Mahindra1614.035.78 Note: In Table 2, absolute change is over March quarter
(Figures in Rs crore)
Source: Value Research

During the June quarter, the average assets of Reliance MF fell compared with the March one. UTI MF registered less than three per cent growth. ICICI MF, HDFC MF and Sun Life Birla MF managed to grow their assets by five to nine per cent.

“There is a major boost from the re-allocation of funds by institutions in short-term and ultra short-term schemes. Institutional money is pouring into the mid-sized fund houses in a larger quantum. However, on the equity side, the scenario is still bleak,” explains an industry CEO who did not want to be named for this story.

Consider this: Inflows in the debt category was the highest for ICICI MF, which saw a rise of 13.6 per cent in its debt assets, while others remained below 10 per cent and in the case of Reliance MF, the rise in debt assets was a marginal 0.37 per cent.

On the other hand, debt assets rose 39 per cent for Deutsche MF and IDFC MF, while SBI MF saw a 27 per cent rise and Tata MF registered a growth of 15 per cent in these assets.

According to an industry expert, “Institutions seem to be putting their funds across the board and not confining themselves to selective fund houses.

Institutions, including corporates, are not allocating larger sums in fund houses where they are already invested.”

Dhruva Chatterji, senior research analyst at fund tracker Morningstar India, says, “Launch of FMPs by the mid-sized fund houses also helped the players garner assets during the quarter.”