Foreign-owned fund houses lost market share (assets under management) by 11.4 per cent in the last one year, when the industry AUM itself remained flat.
According to data on the AMFI Web site, as on September 2011, the cumulative AUM of the foreign fund houses stood at Rs 77,411 crore, down by Rs 9,942 crore from Rs 87,353 crore as on September 2010.
The industry, during the same period, declined by about Rs 618 crore — from Rs 7.13 lakh crore to Rs 7.12 lakh crore.
The Indian mutual fund houses, however, have fared better and added Rs 9,323 crore to their cumulative AUM. The AUM of the Indian fund houses moved from Rs 6.26 lakh crore to Rs 6.35 lakh crore during this period.
Of the foreign fund houses, Bharti AXA saw the highest decline in AUM at 65.5 per cent from Rs 510 crore to Rs 176 crore.
JP Morgan Asset Management was next with a decline of about 44 per cent from Rs 8,447 crore to Rs 4,747 crore.
Fund houses say that the decline is mainly due to the erosion in the value of the fund schemes themselves.
Drop in equity
BSE Sensex has in the last one year declined by about 5 per cent. So, the drop in the overall AUM could be attributed to the drop in the equity AUM of the fund houses.
However, foreign-owned fund houses have lower retail presence when compared to their Indian counterparts. More of institutional money finds its way into these fund houses, said experts.
During the one-year period under consideration, the assets under management of the income and liquid schemes, which see more participation from banks and institutions, grew by 4.4 per cent from Rs 4.14 lakh crore to Rs 4.32 lakh crore. However, that did not seem to have a positive impact on the foreign-owned fund houses.
“Unless the equity-debt split in the AUM data is made available, it would be a skewed representation of the growth in the foreign fund houses,” said the CEO of a foreign-owned fund house who did not wish to be quoted.
“However, it must be noted that the foreign fund houses have consciously tried to increase their penetration in the last one year and gone beyond the top five urban cities.”
Another factor for the drop in the AUM could also be the fear among investors and their reluctance to increase exposure to foreign fund houses.
“One worry among both the retail and institutional investors is that in case of a default on a global level, the parent company may not be in a position to bail out the Indian counterpart,” said an official from an Indian fund house.
AIG
Analysts cite the example of AIG, which in 2008 sold off its subsidiaries which included the global asset management business. AIG Investments was then sold off to Pinebridge Investments, a lesser known company.
The negative environment with worries over Europe and the exposure to these markets have left the big and small investors worried.
“During such turbulent times, investors prefer to invest with local (Indian) fund houses, thereby, reducing risk,” said Mr Hiren Dhakan, Associate Fund Manager, Bonanza Portfolio.
Analysts agree that this may also be the reason for the increase in the AUM of the Indian fund houses. The cumulative AUM grew by about 1.5 per cent.
Of the 15 (predominantly) foreign-owned fund houses, seven fund houses saw their AUMs decline. Daiwa, Pramerica and Mirae Asset were the top three fund houses to register an increase in their AUM at 147, 138 and 62 per cent, respectively.
Goldman Sachs also saw an increase of 73 per cent. However, that is due to its purchase of the Indian fund house, Benchmark, in March this year.