FUND FULCRUM

October 2016

Mutual fund industry's asset base surged by 12% to a record high of Rs 16.11 lakh crore in July-September quarter helped by strong participation from retail investors and robust inflow in equity schemes. The industry, comprising 42 active players, witnessed increase in average assets under management (AUM) to Rs 16.11 lakh crore in three months ended September 30, 2016, from the previous high of Rs 14.41 lakh crore during April-June quarter, data available with industry body Association of Mutual Fund Industry (AMFI) showed. Among the top five players, ICICI Prudential Mutual Fund led the pack with asset base of Rs 2,15,986 crore (excluding Fund of Funds) followed by HDFC Mutual Fund (Rs 2,13,086 crore), Reliance Mutual Fund (Rs 1,83,129 crore), Birla Sun Life Mutual Fund (Rs 1,68,881 crore) and SBI Mutual Fund (Rs 1,31,554 crore). The asset base of mutual fund industry has been growing in the last few years. In fact, AUM has increased from Rs 3.26 lakh crore as March 31, 2007 to Rs 16.11 lakh crore at the end of September 30, 2016, a five-fold growth in a span of less than 10 years. The industry's asset base had crossed the milestone of Rs 10 lakh crore for the first time in May 2014 and in a short span of two years, the AUM size has crossed Rs 16 lakh crore. 

Driven by addition in equity fund folios, mutual fund houses have registered a surge of more than 29 lakh investor accounts in the first six months of the current fiscal, taking the total tally to surpass the 5-crore mark. This is on top of an additional 59 lakh folios in 2015-16 and 22 lakh in 2014-15. According to the data from the Association of Mutual Funds in India (AMFI) on total investor accounts with 43 fund houses, the number of folios rose to a record 5,05,59,495 at the end of last month from 4,76,63,024 in March-end, a gain of of 28.96 lakh. Growing participation from retail investors, especially from smaller towns and huge inflows in equity schemes have helped in increasing the overall folio count. The equity category witnessed an addition of more than 15 lakh investor folios to 3.75 crore in April-September period of the current fiscal. 

Mutual Funds have invested over Rs 13,500 crore in equity markets in the first nine months of 2016 due to strong participation from retail investors. This is on top of over Rs 70,000 crore already invested in the entire 2015 and around Rs 24,000 crore in 2014. The inflow can be attributed to investment in systematic investment plans (SIPs) and strong participation from retail investors. As per the data released by the Securities and Exchange Board of India (SEBI), mutual fund managers invested a net sum of Rs 13,565 crore in the equity markets during January-September period of 2016. In addition, fund managers have infused over Rs 3 lakh crore in the debt markets during the period under review. The inflow is in line with BSE's Benchmark Sensex rising 1,748 points or 6.7% during the period under review. 

Piquant Parade

Fortune Financial Services & Fortune Credit Capital has received in-principle approval from SEBI to launch mutual fund business. At a time when foreign fund houses are exiting Indian asset management business, a few domestic players are gung-ho about starting mutual fund business. Fortune Financial Services & Fortune Credit Capital is listed on BSE and is SEBI registered Category I Merchant Banker. It also has a Portfolio Management Services (PMS) license. The company has four business verticals viz. Fortune Equity Brokers, Fortune Commodities & Derivatives, Fortune Credit Capital and Fortune Financial India Insurance Brokers. In June 2016, SEBI had given in-principle approval to Yes Bank which is expected to launch its operations within a year. Meanwhile, SEBI data shows that Trust Investment Advisors and Karvy Stock Broking are awaiting approval from SEBI to launch mutual fund business in India. While Yes Bank and Fortune Financial Services & Fortune Credit Capital have approached SEBI in November 2015 and June 2015 respectively, Trust Investment Advisors had applied for a license in September 2014. Karvy Stock Broking is waiting to get in-principle approval from SEBI since five years. It had applied for AMC license in November 2011. Interestingly, all four companies have a mutual fund distribution arm. AMFI data shows that Yes Bank, Trust Investment Advisors, and Karvy Stock Broking have assets under advisory (AUA) of Rs.678 crore, Rs. 1,115 crore, and Rs. 5,056 crore respectively as on March 2015.

AMFI has elected A. Balasubramanian, CEO, Birla Sun Life Mutual Fund as its Chairman. Balasubramanian has replaced Leo Puri who was appointed as the AMFI Chairman in 2015. G Pradeepkumar, CEO, Union KBC Mutual Fund is now the Vice Chairman of AMFI. AMFI’s committees were also reconstituted.  As the Chairman, Balasubramanian will head the Financial Literacy Committee. Nilesh Shah, Managing Director, Kotak Mutual Fund CEO, has been appointed as the Chairman of the Valuation Committee. Meanwhile, Sourabh Nanavati, CEO, Invesco will continue to head registration of Distributors Committee. Sanjay Sapre, President, Franklin Templeton will head operations and Compliance Committee. Currently, there are 15 members on AMFI board of which seven are from top ten fund houses and four each from mid and small sized AMCs.

to be continued…