Mutual funds’ average assets cross the Rs 9 trillion mark: CRISIL

Out of the 43 fund houses that have declared their average AUM, 30 posted a rise in their assets

April 04, 2014 7:57 IST | India Infoline News Service
The Indian mutual fund industry reached another milestone in the quarter ended March 2014. Its average assets under management or AUM (excluding fund of funds) rose over 3%, or by Rs 277 bn, to Rs 9.04 trillion, according to the Association of Mutual Funds in India (AMFI). Growth in the latest quarter was driven by inflows into fixed maturity plans (FMPs), money market and equity funds. For the financial year 2013-14, the industry’s assets increased 11% or Rs 876 bn vis-à-vis 23% growth seen in the previous financial year.
Equity funds reclaim the Rs 2 trillion mark
Equity mutual funds’ average AUM rose for the second consecutive quarter and regained the Rs 2 trillion mark after a gap of three quarters. The assets rose by 4% or Rs 71 bn to Rs 2.03 trillion led by inflows in January and February (as per latest data available from AMFI) and mark to market (MTM) gains in the quarter. The underlying market, represented by the CNX Nifty, gained 6% during the quarter, led by encouraging domestic economic indicators, positive global sentiment and strong buying by foreign institutional investors (FIIs).
Assets under FMPs surge to a new high
Assets of fixed maturity plans (FMPs) rose by 18% or Rs 234 bn to Rs 1.55 trillion during the quarter and contributed the most to push the overall mutual fund assets to a record high. The category saw a spurt in new launches (a typical financial year end phenomena) as investors were drawn to the indexation and double indexation benefits offered by these funds. As per the latest data available from AMFI, in the first two months of the latest quarter, fund houses garnered Rs 326 bn by launching 203 FMPs compared with Rs 341 bn by launching 187 FMPs in the March 2013 quarter. A high interest rate scenario led by Reserve Bank of India (RBI) monetary tightening measures since July 2013 also prompted investors to lock their investments at higher yields in these closed-ended funds. Yields on the one-year commercial paper (CP) and certificate of deposit (CD) traded at 9.44% and 9.06%, respectively on March 28, 2014, up significantly from 8.76% and 8.15% at the end of June 2013.
Money market funds saw a marginal rise in assets
Assets of money market funds grew by 4% or Rs 92 bn (vis-à-vis 35% or Rs 602 bn rise in the previous quarter) to Rs 2.41 trillion. The category assets gained due to inflows arising from the improvement in liquidity due to lending by the RBI through its term repo window, purchase of gilts via open market operations and the government’s capital infusion into state-owned banks. Further gains for the category were offset by outflows in March resulting from corporate advance tax and financial year-end requirements.
Debt and gilt funds lag
The debt (long and short-term) and gilt funds category underperformed in the March quarter owing to the uncertain interest rate environment. The debt and gilt category typically performs well in a falling interest rate scenario. Debt (long and short term) funds’ AUM fell by Rs 158 bn to Rs 1.65 trillion, while gilt funds’ AUM fell by Rs 8 bn (the biggest fall since September 2010 quarter when the AMFI started declaring quarterly average AUM) to Rs 69 bn.
Gold ETFs’ assets fell by 5%
Average AUM of gold exchange traded funds (ETFs) shrank by around 5% (or Rs 4 bn) to Rs 91 bn in the reported quarter following an 11% fall in the previous quarter. The category saw outflows of Rs 3.4 bn in January and February despite a rise in the prices of underlying assets during the quarter.
Share of direct plans increases to 33%
The share of direct plans increased to 33% of the industry’s AUM (excluding fund of funds) in the reported quarter vis-à-vis 30% in the previous quarter. In terms of absolute assets, the average AUM of direct plans rose 12% (Rs 321 bn) to Rs 2.95 trillion during the March quarter from Rs 2.63 trillion in the December quarter. Direct plans came into existence on January 1, 2013 after the Securities and Exchange Board of India (SEBI) asked fund houses to provide informed investors direct access to mutual fund schemes sans any distributor cost.
Most fund houses post a rise in average AUM
In the just concluded quarter, out of the 43 fund houses that have declared their average AUM, 30 posted a rise in their assets. ICICI Prudential Mutual Fund registered the highest growth in assets in absolute terms, up by Rs 96 bn to Rs 1.07 trillion, followed by Birla Sun Life Mutual Fund, whose assets rose by Rs 41 bn to Rs 891 bn. In percentage terms, JPMorgan Mutual Fund saw the highest rise of 26% in assets to Rs 162 bn.
ICICI Prudential Mutual Fund crosses the Rs 1 trillion mark; HDFC Mutual Fund retains top position
HDFC Mutual Fund retained its top position across fund houses in the March quarter. The fund’s average AUM was up by around 4% or Rs 40 bn to Rs 1.13 trillion. After posting almost 10% or Rs 96 bn gain in the March quarter, ICICI Prudential Mutual Fund entered the league of fund houses with assets over Rs 1 trillion. With assets of Rs 1.07 trillion, it captured the second position, pushing back Reliance Mutual fund (who managed AUM of Rs 1.04 trillion with gain of 1% or Rs 11 bn) to third position. The share of the top five mutual funds’ assets rose to 54% in the March quarter from 53% in the previous quarter while the share of top 10 funds’ assets was 78% (same as the previous quarter). The bottom 10 fund houses continued to occupy less than 1% of the average AUM.

Table: 1 Category-wise average AUM (Rs bn)
Mutual fund category Jan-Mar 2014 Oct-Dec 2013 Absolute Change (bn) % Change
Equity 2026.11 1955.28 70.83 3.62
Liquid/money market 2404.83 2313.06 91.77 3.97
Ultra short term 837.63 804.26 33.37 4.15
Short term debt 705.69 728.26 -22.57 -3.10
Long term debt 946.60 1082.12 -135.52 -12.52
Gilt 68.67 76.76 -8.09 -10.54
Fixed maturity plans (FMPs) 1550.39 1316.62 233.77 17.76
Other debt-oriented funds 367.02 359.37 7.65 2.13
Gold ETFs 91.00 95.34 -4.34 -4.55
Others 44.75 34.39 10.36 30.13
Total 9042.69 8765.46 277.23 3.16
Source - CRISIL Mutual Fund Database
Table 2 – Category-wise average AUM of direct plans (Rs bn)
Mutual fund category Jan-Mar 2014 Oct-Dec 2013 Absolute Change (bn) % Change
Equity 78.18 65.36 12.82 19.62
Liquid/Money market 1369.65 1282.93 86.72 6.76
Ultra short term 308.45 290.57 17.88 6.15
Short term debt 164.73 163.13 1.60 0.98
Long term debt 154.17 162.46 -8.29 -5.10
Gilt 18.56 20.10 -1.53 -7.64
Fixed maturity plans (FMPs) 799.14 595.25 203.89 34.25
Other debt-oriented funds 55.86 47.53 8.33 17.53
Total 2948.74 2627.31 321.43 12.23
Source - CRISIL Mutual Fund Database

Table 3 – Top 10 AMCs by average AUM (Rs bn)
Mutual fund category Jan-Mar 2014 Oct-Dec 2013 Absolute Change (bn) % Change
HDFC Mutual Fund 1129.63 1089.90 39.73 3.65
ICICI Prudential Mutual Fund 1068.22 971.91 96.31 9.91
Reliance Mutual Fund 1035.42 1024.87 10.55 1.03
Birla Sun Life Mutual Fund 890.51 849.98 40.53 4.77
UTI Mutual Fund 742.33 743.51 -1.18 -0.16
SBI Mutual Fund 654.99 645.61 9.39 1.45
Franklin Templeton Mutual Fund 454.04 442.58 11.47 2.59
IDFC Mutual Fund 413.49 412.48 1.02 0.25
Kotak Mahindra Mutual Fund 330.79 357.58 -26.78 -7.49
DSP BlackRock Mutual Fund 316.31 326.41 -10.10 -3.10
Source - AMFI

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