Tuesday, December 22, 2015

MFs see rise in number of equity schemes with assets worth Rs 10k crore

India's mutual fund industry is witnessing a rising number of equity schemes with asset worth Rs 10,000 crore. In 2015, such schemes doubled in number from three to six while one is barely Rs 100 crore away from getting into this elite group.

Interestingly, this happened in a year when key benchmark indices lost around 8 per cent while they are down 14 per cent from their all time highs. Thanks to the incessant robust inflows from India's retail investors that mutual fund sector could see its schemes surpassing the Rs 10,000 crore mark.

These schemes include, HDFC Equity Fund, HDFC Top 200, Reliance Equity Opportunities Fund, ICICI Prudential Value Discovery Fund, HDFC Mid Cap Opportunities and Birla Sun Life Frontline Equity Fund. Put together, they manage assets worth a whopping Rs 74,000 crore or nearly 20 per cent of overall equity assets.

Kaustubh Belapurkar, director of manager research at Morningstar India, says, "It was certainly the strong domestic inflows on the back of retail investors' participation which helped these funds gain in size in a year when markets gave negative returns. Popular funds, generally, turn out to be beneficiary in an environment where inflows are robust."

Majority of these schemes have given negative return from a year perspective. Experts suggest that if inflows remain robust and market perform, it would not be surprise to see more number of schemes joining the Rs 10k crore club.

According to Belapurkar, "I believe number of such schemes will only rise if market performs and inflows remain intact as there are several schemes with assets between Rs 5,000 crore and Rs 7,000 crore. They may soon join the club if market does well."

It appears quite possible. There are at least seven more schemes. ICICI Prudential Focused Bluechip is almost there with an asset under management (AUM) of Rs 9,896 crore. While schemes like Franklin India Bluechip (Rs 6,694 crore), Axis Long Term Equity (Rs 6,497 crore) and Franklin India Prima Plus (Rs 6,145 crore) are well established funds and among the most popular with investors.

Amid this, what's good for the industry as well as the investors is the fact that concentration of equity assets among top twenty schemes has started to reduce. A year back, 42 per cent of equity assets were managed by the top 20 largest schemes; this has declined to 37 per cent in 2015.

It essentially means that lesser known funds managed by not that famous fund managers, too, are getting inflows from investors. This is not only adding to the strength of the industry but also helping investors diversify their investments among several other fund managers by not putting all their money in one basket.

Currently, mutual fund industry offers about 460 equity oriented schemes managing assets worth Rs 4 trillion.

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