The Hindu Business Line : MFs' asset base moves up sharply

ASSET sizes, like so many other things in life, change constantly in the world of mutual funds. Yesterday's laggards often become tomorrow's leaders, and the big boys of the moment may well turn into midgets in future.

A look at the total assets under management, considering the October-end figures, indicates the kind of change that has been taking place in the MF space.

That the ugly duckling of yore is slowly emerging into a beautiful swan is clear from a comparative study, based on aggregate AUMs pertaining to October 2004 and October 2005.

Let's check out the numbers first. AMFI, the industry association, puts the latest tally at Rs 2,01,055 crore, inclusive of the AUM of all FoFs (Funds of Funds). View this against the October 2004 score - Rs 1,47,919 crore.

Without getting into too many details, we can safely assume that the increment is a result of higher allocations by more investors to mutual funds.

Fund houses have collectively increased their share, perhaps at the cost of less alternative modes of savings.

So, who are the big gainers? A closer look at the AUM data will tell you that the top players have managed to consolidate their positions in the sector.

UTI MF has retained its No. 1 status, having grown from Rs 20,079 crore to Rs 24,934 crore during the 12-month period under review.

The likes of Pru ICICI MF, HDFC MF and Franklin Templeton MF have all stood to gain in varying degrees.

The current score card has a new player - Fidelity MF - while GIC MF has said goodbye to the market, having moved into the Canbank MF fold. Alliance Capital MF too is no more in operation.

As things stand, the smaller players include Benchmark MF, the Exchange Traded Fund specialist, which has Rs 2,956 crores, up from a much lower count.

Also in this list are BOB Mutual Fund (Rs 196 crore) Escorts MF (Rs 131 crore), Sahara MF (Rs 665 crore) and Taurus MF (Rs 169 crore).

Sitting pretty at the other end of the spectrum is SBI Mutual Fund, which has recently tied up with SocGen. Its AUM is up very sharply. From Rs 5,375 crore in last October to Rs 10,699 crore now. And that is more than double.

Morgan Stanley Mutual Fund (which, like Fidelity, is a single-product outfit) needs a special mention here. It has ended up with Rs 1,900 crore, up from Rs 1,298 crores a year ago.

Fidelity MF watchers incidentally, may note that the newcomer now manages Rs 2,473 crore - and that should soon change in view of the tax-saving fund that it is expected to be introduced.

Not unjustifiably, one can expect the bank-promoted players to increase their asset base substantially. And there are quite a few of them - HSBC Mutual Fund, Deutsche Mutual Fund, ING Vysya MF, ABN Amro MF and so on, not to mention the SBI Mutual Funds and the Canbank MFs of the world.

Will the bank-sponsored lot be able to expand critically? There is no reason to think otherwise; after all, they have a captive audience to tap.

Each of them is sitting on a huge pile of deposits, some of which may well move out into the realm of mutual funds.

Let us wait and watch.

Fundspeak

Bear markets and bull markets can last for months, if not years. Because of this, systematic investment is generally not a short-term strategy but a long-term strategy for wealth creation.

Mr D.S.R. Murthy, ED, UTI

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

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