The Hindu Business Line : Fund assets – latest tally reveals changing trend

Do you know that Robeco, the Rabobank-promoted outfit that has struck a joint venture with Canbank Mutual Fund, manages over Rs 7 lakh crore internationally? Well, chances are that you do not, nor do you load your brain with such seemingly useless nuggets of information.

But, believe us, that little nugget is not useless at all. In fact, that, and many others of its ilk, together form a pretty picture – essentially it revolves around the extent and scope of the global asset management industry. That is because the figure in question (Rs 7 lakh crore is a cool €140 billion) is stupendous by Indian standards.

Asset base

This is not to say that the funds industry in this country, an undersized contributor to the world total,is not growing in terms of size and potential. It sure is, a fact reflected in the latest AUM (assets under management) tally released by the Association of Mutual Funds in India.

The latest set of figures released by AMFI, pertaining to September, seems fairly decent. Or so argue investment circles, citing the growth that has been evident in certain product categories. However, the net increase in the total asset base (vis-À-vis the previous month) is perhaps not too impressive: a little less than Rs 10,000 crore.

What does this indicate? While we leave it for you to decide, here is an interesting point or two put forward by a friend of ours, Mr Sameer Kamdar, who heads mutual funds at Mata Securities. The marginal increase in AUM, he maintains, “hides the real picture as September witnessed advance tax outflows amounting to approximately Rs 30,000 crore”.

This rather sizeable outflow notwithstanding, the total AUM grew, albeit in a minute way. This is also a positive deviation from earlier quarter-ends when the industry AUMs declined due to advance tax outflows, it is pointed out.

Mr Kamdar has attributed the trend to two principal factors. One, all indices including the broad-based Sensex (as well as mid-cap and small-cap indices) generated a solid performance during September. This would have added almost Rs 18,000 crores of mark-to-market gains in AUMs.

Two, with the Indian economy expanding at a fast clip, the amount of ‘new money’ being created in the system is also on the rise. And this would explain the small growth in AUM in spite of the huge advance tax outflows.

Fixed maturity plans

It is also pointed out that the FMP category – we are talking about fixed-maturity plans – has recorded a rather flat growth. This is clear from the merely 50-odd FMPs and interval funds that were rolled out in September. The relevant figure in August was 58.

If we look at the liquid plus funds, we will see how it has remained a favourite of sorts, especially among wholesale investors. Incidentally, liquid plus fund spreads over regular liquid funds have dropped from 100 basis points (bps) to just about 60 bps during the month.

So, where does this leave equity, that most dynamic of asset classes? Well, there were merely three equity new fund offers (NFOs). Cumulatively these collected a modest Rs 1,300 crore in September. “Considering the scorching growth in equity indices, there is a perceptible drop in NFOs of equity funds and their collections”, Mr Kamdar has observed, adding that the slowdown in equity NFO issuances is rather puzzling.

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

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