Union MF expects 50% growth in AUM, to reach Rs 15,000 cr mark by March

Union Mutual Fund, which has been an also-ran since its launch in 2012, is on a growth path now and is looking at adding at least 50 per cent more to the AUM this fiscal, sniffing at Rs 15,000 crore by March.

Despite having 22 funds (21 open-ended and one close-ended funds), the fund house sponsored by Union Bank of India and Japanese major Daiichi Life could not reach anywhere in the pecking order in the 43-player scattered industry that controls more than Rs 43 lakh crore of public money in its over 11 years of operations..

In the year to March 2023, it had an AUM of just Rs 9,853 crore across 4.96 lakh live folios from 21 cities. Daiichi picked a 39.64 per cent stake in the MF in May 2018.

But in terms of its presence in small towns, Union MF does reasonably well with 32 per cent of the AUM coming in from the B30 (beyond top 30) cities and the rest from the T30 (top 30) cities.

"As of June our AUM stood at Rs 10,700 crore, up from Rs 9,853 crore in March 2023. We hope to take the AUM to around Rs 15,000 crore by next March as we plan to launch a large thematic fund next month from which we hope to collect at least Rs 500 crore during the NFO period. Of course, a lot will depend on the market," chief executive G Pradeepkumar told PTI.

Pradeepkumar has been with the fund house from day 1 and was, in fact, the first employee, and had earlier worked with UTI for long, when the public sector fund house faced the Unit 64 crisis leading to the bailout of the scheme in the late 1990s.

Admitting that they could not grow in all these years, Pradeepkumar said the poor performance was primarily due to its first foreign partner KBC of Belgium which was against any third-party sales channels, limiting sales only to the Union Bank branches.

But that is past. Since May 2018 when Daiichi Life picked up a 39.64 per cent stake and now we have many banks as distribution partners. As a result, only 20 per cent of sales come from Union Bank branches now, he said, adding the fund house has over 7,000 distributors and around 15,000 who are empanelled with us today.

"In fact, we've more than doubled our AUM since Daiichi entered as the AUM was only Rs 4,500 crore in March 2018 which rose to Rs 9,853 crore in March 2023. And we are confident of further building on from this momentum, he added.

He said of the total AUM, as much as Rs 7,500 crore is in equity (Rs 5,500 crore in equity alone) and hybrid funds and the rest in debt (only in Central government and corporate bonds, and not into state government debt). Also, it is not into gold ETFs or any other passive funds nor has any plan to enter them as well.

But Pradeepkumar claimed that despite low AUM they are among the leaders when it comes to consistently above average returns with its first funda flexcicap fund with Rs 1,500 crore in AUM giving a compounded average return of 24.7 per cent since 2018 and a tax saver fund with Rs 635 crore in AUM offering 25.6 per cent.

The company has been profitable for the past five years and closed FY23 with a net income of Rs 13 crore from an income of Rs 55 crore, he said.

"While we want to grow larger that will not be at the cost of profitability. Our fundamental focus is and will be sustainable and profitable growth and not faster growth at any cost," he said.

Pradeepkumar further said the company is looking at entering the AIF space and will soon seek Sebi registration for the same and hope to launch it this fiscal year itself. We are already managing an offshore fund for Daichi.