Top mutual funds' growth in assets managed outpaces industry

Largest five fund houses capture 53% of total assets under management

Investors’ preference for India’s large fund houses is on the rise. The top five giants have cornered more than half of the industry’s assets under management (AUM). At at time when the number of players in the industry has risen from 38 to 45 over the last couple of years, the top five fund houses’ dominance continues.

Domestic fund giants HDFC Mutual Fund, Reliance MF, ICICI Prudential MF, Birla Sun Life and UTI have not only captured 53 per cent of the sector’s assets but have also outpaced the sector’s AUM growth in the current financial year so far.

Consider this: Statistics from industry body Association of Mutual Funds in India (Amfi) show that as on December 31, 2013, the average AUM of the industry stood at Rs 8.75 lakh crore, a rise of 8.3 per cent when compared with the immediately preceding quarter. Compared to the beginning of this financial year (2013-14), the rise in AUM is 7.2 per cent.

However, when the collective average AUM of the sector’s big boys is taken into consideration, the picture reveals that the growth has been 9.15 per cent (quarter-on-quarter) and 8.7 per cent so far in FY14.

In both cases, whether it was quarter-on-quarter or so far in FY14, the top fund houses scored better than the sector as a whole.

Industry officials admit that there is polarisation of assets towards the top players. It has been happening over the years and in recent years, the trend has only increased, they say. According to them, one big factor propelling the trend is the availability of a long track record of funds’ performance with the large fund houses. Most of them have been in existence for more than a decade and a half. Moreover, the brand equity and reach of top players is far higher and extensive than their peers in the mid and small-size space.

Executives of the country’s largest fund houses admit that the brand and track record are two vital requirements for attracting investors. It holds true when one considers the emerging giant SBI AMC too. With one of the widest reaches in the country, the fund house, currently sixth largest in the industry, has grown rapidly over the last three years from an AUM size of Rs 40,000 crore to Rs 64,560 crore as of now. The SBI brand name has been a plus point for the fund house.