Foreign fund houses seem to be gaining ground in the Indian mutual fund industry, which is dominated by local players. At a time when growth in the industry’s asset under management is mostly stagnant, players abroad have put up a better show, managing a steady growth in gathering assets.
So far this year, foreign asset managers have registered a relatively high growth, owing to a low asset base, improvement in performance ratings and recognition of brands among investors. Not only have they seen a better growth rate than the overall industry, but the managers have also outpaced domestic fund houses by registering a more-than-three-times faster rate in building assets during the first half (April-September) of the current financial year. This has helped foreign houses increase their market share by 30 basis points to 10.86 per cent in the domestic fund market.
Puneet Chaddha, chief executive officer of HSBC AMC, says, “This tilt in growth towards global funds gives a clear sense that investors’ acceptance and comfort with global players is on the rise.”
Consider this: in the first half of the current financial year, assets of foreign fund managers grew by 4.56 per cent to Rs 77,412 crore from Rs 74,037 crore. The same period saw the industry adding 1.74 per cent more assets to Rs 7,12,742 crore, while domestic players — they control a lion’s share in the market —could grow their assets by a meagre 1.4 per cent.
Interestingly, the previous financial year saw the contribution of local fund managers in the overall fall of industry’s assets at a whopping 97 per cent or Rs 45,724 crore. The industry had lost Rs 46,987 crore of assets in the year. So far this fiscal, global players contributed around 28 per cent in adding fresh assets. The rest came from local fund houses.
In terms of ratings too, global players’ schemes have made their presence felt among the top performers. According to data available from Value Research Online, some of the schemes of Franklin Templeton, Fidelity, Mirae Assets, ING, AIG, Principal, BNP Paribas, JP Morgan have made it to the top slot in different asset categories.
According to experts, a possible reason, apart from low asset base of foreign players, for less growth rate in domestic fund houses’ growth could be the new guidelines from the Reserve Bank of India that banks should put only 10 per cent of their net worth as investment with Mutual Funds.
Generally, they say, domestic players tend to focus more on liquid schemes (where banks put in money). “This may have contributed in reduction of assets of local fund houses,” adds Chaddha.
Domestic majors like Reliance Mutual Fund lost around 11 per cent of its assets in the first half, while UTI saw an erosion of 6.86 per cent. Whereas, assets of Birla Sun Life AMC grew less than one per cent, ICICI Pru and HDFC MF reported a growth of 2.39 per cent and 6.4 per cent respectively.
Among the foreign players, assets of JP Morgan AMC grew by 39 per cent, while that of Baroda Pioneer scaled up by 31 per cent followed by Goldman Sachs (28 per cent), BNP Parbas (12 per cent) and HSBC (11 per cent).
