Top mutual funds grab larger debt share after IL&FS crisis, say experts

The recent volatility in the debt market has lent a helping hand to larger fund houses in increasing their market share in debt assets. The top-five mutual funds' (MFs’) share of debt assets has increased from 52 per cent at the end of August last year (before the IL&FS crisis) to 57 per cent at the end of May.

Overall, debt assets managed by these fund houses have gone up from Rs 6.2 trillion to Rs 6.7 trillion during this period, reflecting a growth of 7 per cent. 

According to experts, larger fund houses are drawing the bulk of the flows coming into the liquid schemes, which is driving this growth. “Investors expect larger-sized schemes to have more manoeuvrability when dealing with redemption pressures,” said Vikram Dalal, founder at Synergee Capital, a Mumbai-based advisory firm. 

“Investors are seeking safety and larger-sized schemes are seen as safer options, especially in difficult market cond­itions,” said Amol Joshi, founder, Plan Rupee Investment Services, another advisory firm. 

Between April and May, debt schemes have drawn inflows of Rs 1.9 trillion. At Rs 1.6 trillion, liquid scheme flows accounted for 82 per cent of these flows.