Focus on equity business helps Mirae, Motilal Oswal buck the trend

Mirae Asset MF has clocked the highest growth rate in equity assets among mid-sized fund houses over the past one year.  Motilal Oswal’s assets also grew at 24 per cent.

While it's mostly the larger fund houses that have benefited from the surge in equity flows, the focus on equity business and stellar performance of schemes have helped these two fund houses buck the trend.

In the past one year, Mirae Asset MF's assets grew 55 per cent to Rs 17,908 crore, while that of Motilal Oswal MF's grew 24 per cent to Rs 16,926 crore, data collated by Value Research revealed.  "Our sharp product positioning has ensured that there is no clutter in our portfolio. This along with our performance and our brand - known to be equity-oriented - has helped our growth," said Aashish Somaiyaa, MD & CEO, Motilal Oswal MF.

"The focus on managing few funds, and performance have been the two standout features of these funds. If you are able to create a pull for your product then no distributor will tell you that they won't sell you," said Dhirendra Kumar, CEO, Value Research. The growth of these fund houses is even more remarkable when looked over a longer period. In the past five years, the average assets under management (AUM) of Mirae Asset and Motilal Oswal have grown nearly 14 times and 13 times, respectively, helping both to break into the top 20 club.

"We were the first off-the-block to talk about equities in 2011-12, and among the first to talk about mid-caps in 2012-13. This helped us when the markets turned," said Mirae's CEO Swarup Mohanty.

Fund houses take in asset management fees anywhere between 100 and 150 basis points (bps) for equity schemes, compared to five -100 bps for debt schemes, revealed estimates. Equity assets are also stickier than debt assets.

"Both the fund houses have excelled in fund management, and got their product factors right. They also boast of a stable equity team, and have strengthened their ties with distributors. All these factors have helped them grow their asset base and attract investors," said a senior industry official. 

Overall, equity assets grew 15 per cent to Rs 7.7 trillion last year, with nine fund houses seeing an addition of more than Rs 5,000 crore each in assets. Total AUM of the MF industry, on the other hand, grew at a much slower pace of 5.4 per cent to Rs 24 trillion last year.

According to experts, MFs have benefited from a shift to financial assets from physical assets such as from real estate and gold. Investments through SIPs have averaged Rs 6,000-7,000 crore over the last year or before. "An equity investment culture is rising, and taking a more formal form. Most new-age investors are professionals, earning a livelihood in other industries; stock markets are simply a vehicle for their savings,” said a note by foreign brokerage Jefferies.

Given the lack of expertise, resources and time, these investors are investing through insurance schemes and MFs," said a note by foreign brokerage Jefferies.