HDFC Mutual Fund lines up a slew of exchange-traded funds as ranking slips

HDFC Mutual Fund (MF) has lined up a slew of exchange-traded funds (ETFs) after its ranking slipped on the league table for the country’s most valuable asset management company.

Over the past two days, the fund house has filed nine offers documents in the passive space with the Securities and Exchange Board of India (Sebi). The move is seen as a strategy to increase its market share, which has dwindled over the past few years. 

HDFC MF’s ranking slipped to the third position during the just-concluded September quarter.

The data from the Association of Mutual Funds in India (Amfi) shows that HDFC MF had average assets under management (AAUM) of Rs 4.38 trillion for the quarter. ICICI Prudential MF has now occupied the second position with an AAUM of Rs 4.47 trillion. SBI MF is currently India's largest fund house with AAUM of Rs 5.78 trillion (as of September 30).

Sources in the industry said that HDFC MF has become aggressive in launching new funds. The fund house would soon file papers for a few more products over the next few months, they added. In the past six months, the fund house has already launched four schemes that include equity and hybrid.

“The performance of several HDFC MFs equity schemes has improved and the fund house will sell existing schemes and new launches aggressively to improve its market share. Its idea to launch a series of passive funds is to slowly capture a larger pie of the market,” said a senior executive in the industry.

In the past few years, HDFC MF witnessed continued erosion in its market share as its key equity funds underperformed. But over the past year, its several funds have made a comeback. 

Still, HDFC MF witnessed its AUM market share drop to 12.13 per cent in the July-September quarter of FY22 from 13.6 per cent a year ago.

On Tuesday, the fund house filed eight offers with the market regulator and those included HDFC Nifty Growth Sectors 15 ETF, HDFC Nifty IT EFT, and HDFC Nifty Private Bank ETF. On October 4, it had filed an offer for HDFC Nifty 100 ETF.

So far, the fund house has not aggressively positioned itself in the passive, as well as international fund categories or even thematic and fund of fund schemes. However, there seems to be a change in approach, given investors' growing preference for ETFs.

During the Q1FY22 earnings conference, Navneet Munot MD and CEO at HDFC MF, had stated: “Some of these categories our product bouquet was not full but over the last couple of quarters, we have launched a few products. We are going to have some more products over the next several quarters.”