)
The mutual fund industry’s profits seem poised to hit a three-year high, even as revenues have hit a five-year high, with two fund houses yet to announce their results.
It is expected for 2012-13, net industry profits would stand at about Rs 860 crore for their respective past financial years, going by the results already announced and the past trends for asset managers who haven’t announced their results yet.
During the financial year, 41 mutual funds made a net profit of Rs 763.66 crore, while revenue stood at Rs 4,791.88 crore, according to data from mutual fund tracker Value Research; these stand at Rs 860 crore and Rs 5,134 crore, respectively, if one considers the estimates based on average numbers in previous years for firms whose results are awaited.
V Ramesh, deputy chief executive officer of the Association of Mutual Funds in India, said the results should be seen in the context of how the core business of managing assets was faring against other activities that might be drawing revenues for mutual funds. “It will be different if one looks at the advisory business and other activities which are also being carried out by the same companies. For the mutual fund business, margins are squeezed and compliance cost is increasing,” he said.
This time, a change in customer preferences and a regulatory shift had helped the industry’s net profits, said Waqar Naqvi, chief executive officer, Taurus Mutual Fund. “There was a shift towards long-term debt funds which earn more for mutual funds. The results were also helped by the regulator allowing funds to increase charges,” he said.
The Securities and Exchange Board of India had allowed mutual funds to charge an additional 30 basis points if they secured a certain proportion of their assets from regions other than the top cities. The move was effective October 1, 2012.
Franklin Templeton and Quantum are yet to announce their annual results. For the former, the average profits through the last four years (for which data is available) suggest this year’s profits could exceed Rs 90 crore, with revenue of about Rs 330 crore. For Quantum, the figures stand at Rs 3 crore and Rs 12 crore, respectively.
Larger players accounted for the lion’s share of profits.
With a net profit of Rs 318.75 crore, HDFC Mutual Fund is the most profitable asset manager, followed by Reliance Mutual Fund (Rs 228.99 crore) and UTI Mutual Fund (Rs 148.9 crore).
Last year, Reliance had been the most profitable fund house, with a profit of Rs 276 crore, against HDFC’s Rs 269 crore.
