The Hindu Business Line : Close-end schemes

A SUDDEN interest in close-end schemes has prompted some sections to take a closer look at these products. As things stand, the close-end genre is quite limited in terms of number and diversity. But this has not prevented the curious mind to check out the latest developments on their front.

First, a glance at the existing close-end funds. As AMFI's end-November tally puts it, there are merely 56 of them in the market, with income schemes numbering as many as 42. The next large lot is made up of ELSS or the tax-savers as some like to call them - 11 in all.

Evidently, going by the sheer number, close-end products are not the preferred sort in the asset management space - although these were feted by many players (remember UTI's limited-duration monthly income plans?) in the past.

The recently-introduced close-end income schemes are fixed-term plans too; but all of them are without the guaranteed returns that were promised earlier. In November, for instance, fixed-term products were launched by Birla Sunlife, DSP Merrill Lynch, ING Vysya and Kotak Mahindra. A number of similar products were launched in earlier months.

Assets under management: So how much do the close-end schemes manage at the moment? A mere Rs 14,197 crore as on November 30. Compare this with the combined AUM of their open-ended counterpart - Rs 1,90,322 crore - and you will understand how different the two scenarios are. Income schemes naturally account for the largest chunk of their assets: Rs 10,103 crore.

Just to give you a better idea, let us tell you that open-end growth schemes together command well over Rs 60,000 crore, making them a very big category, the biggest after liquid/money market funds.

As on November 30, the latter had more than Rs 70,000 crore with them, which, as everybody knows, may well change significantly the next time a count is taken. After all, AUMs of liquid products are extremely mutable, they simply change every now and then.

It will also not be a surprise to anybody if we suggest that ELSS, the tax-saving schemes, are the smallest group of funds in terms of asset size. These are only 2 per cent of the total, Rs 3,609 crore to be precise.

As for the number of schemes, open-end growth funds make the No.1 category, thanks to the 175 funds that are available at this juncture. Three of them - offered by Principal, Prudential ICICI and Tata - materialised during November.

Incidentally, open-end income funds make up the next big segment with 135 schemes in all.

UTI - the king: Want to know who the big boys are at the moment? UTI, the largest player in the asset management space, maintains its lead with Rs 25,495 crore. Pru ICICI happens to be the next in line, given the Rs 21,022 crore it manages. The likes of HDFC, Franklin Templeton and Reliance follow.

Others in the Rs 10,000 crore-plus bracket include SBI MF (now hopefully rejuvenated by its association with SocGen), Birla Sun Life, Tata and Standard Chartered.

Occupying the middle ground are players such as DSP ML, Principal and HSBC. The two single-product outfits, Morgan Stanley and Fidelity, are each with less than Rs 3,000 crore to manage. And the really marginal players of the moment are BoB, Creditcapital, Escorts and Sahara. The last-named fund house handles about Rs 495 crore as of now.

Feedback may be sent to nilanjan@thehindu.co.in

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