Domestic mutual fund houses, after being laggard for the last two years in terms of assets gains, 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, they have also outpaced foreign players having operations in India by a margin of close to 300 basis points (a basis point is hundredth part of a percentage point).
Consider this: During April-September, average AUM of domestic fund players zoomed 12.75 per cent to Rs 6.61 lakh crore against Rs 5.86 lakh crore at the end of March 2012. On the other hand, assets of foreign fund houses could gain less than 10 per cent at Rs 86,210 crore, compared with Rs 78,436 crore.
| BACK WITH A BANG Asset growth of local fund houses versus foreign fund houses | |||
| Rs crore | March, 12 | September, 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 |
| Local MFs outpace foreign houses in asset growth in first half Source : Association of Mutual Funds in India (Amfi) | |||
Thanks to the double-digit growth the country's top fund houses came up with during the first half, 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 per cent and added around Rs 12,000 crore in its assets while Birla Sun Life gained over 19 per cent, or Rs 11,000 crore. Similarly, ICICI Prudential MF and Reliance MF gained 11 per cent and 10 per cent, respectively.
Interestingly, in the last two consecutive financial years, domestic players had either gained less or lost more compared with their foreign counterparts.
The 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 per cent of their networth 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.
