Domestic mutual fund houses, after being laggard for the last two years in terms of assets gain, have made a strong comeback in the first half of the current financial year.
The growth in their average assets under management (AUM) has not only surpassed the industry's overall growth, rather they also outpaced foreign players having operations in India too by a wide margin of close to 300 basis points (a basis point is hundredth part of a percentage point).
Consider this : During April-September period of FY2012-13, average AUM of domestic fund players zoomed 12.75% to Rs 6,61,123 crore against Rs 5,86,353 crore at the end of March, 2012. On the other hand, assets of foreign fund houses could gain less than 10% at Rs 86,210 crore compared with Rs 78,436 crore.
Showing asset growth of local versus foreign fund houses:
| March, 12 | Sept, 12 | Growth (%) | |
| Indian | 5,86,353 | 6,61,123 | 12.75 |
| Foreign | 78,436 | 86,210 | 9.91 |
| Industry | 6,64,792 | 7,47,333 | 12.41 |
| All figures in Rs crore Source : Association of Mutual Funds in India (Amfi) | |||
Thanks to the double-digit growth country's top fund houses came up with during the first half that local players could beat the high growth trajectory of the foreign houses, which had been gaining grounds in Indian market consistently.
For instance, UTI AMC clocked a massive growth of 20.13% and added around Rs 12,000 crore in its assets while Birla Sun Life gained over 19% or 11,000 crore. Similarly, ICICI Prudential MF and Reliance MF gained 11% and 10%, respectively.
Interestingly, in last two consecutive financial years - FY11 and FY12, domestic players had either gained less or lost more compared with their foreign counterparts.
Major factor which impacted the Indian fund houses was the new guidelines from the Reserve Bank of India (RBI) last year whereby the apex bank had asked banks not to put more than 10% of their net worth as investment with mutual funds.
Generally, domestic players tend to focus more on liquid schemes where banks put in money and on the back of new RBI guidelines, banks withdrew funds from MFs leading to contraction of industry's AUM.