Change in AUM mix a key near-term challenge for AMCs as investors turn wary

Share of high-margin equity is coming down in favour of less profitable liquid funds

The stocks of two listed asset management companies (AMCs) — HDFC Asset Management Company (HDFC AMC) and Nippon Life India Asset Management Company (Nippon AMC) — have underperformed the broader market over the past month. While the AMC stocks shed up to 16 per cent in the past month, the BSE Sensex rose around 5 per cent. 

The negative impact of the change in assets under management (AUM) mix on the AMCs’ top line and earnings is hurting investor sentiment towards these stocks. There is also lower equity inflows.

In the current Covid-19 crises, investors have turned relatively conservative and prefer less