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Thanks to the spate of new fund offers, smaller mutual funds (MFs) have registered a faster growth in assets under management (AUM) compared to the top-10 players. This is largely due to the entry of more nimble financial services firms in the asset management business.
Unlike legacy players, new entrants are using the online platform to cut costs and reach smaller cities to grow business.
Assets under management
The assets under management (AUM) of top 5 MFs grew 26 per cent year-on-year (yoy) last calendar year (CY2021) to ₹ 21.26-lakh crore against ₹16.98-lakh crore in 2020.
The next top five players had registered a 30 per cent AUM growth in CY2021 to ₹9.94-lakh crore (₹7.66-lakh crore in CY2020).
However, the rest of the AMCs registered an impressive 40 per cent growth to ₹7-lakh crore (₹5-lakh crore).
In the last one year, the number of mutual funds have increased by two to 45 as SEBI eased norms to pave the way for new players and widen their market reach.
New fund offers
Kavitha Krishnan, Senior Research Analyst, Morningstar India, said smaller fund houses such as Quant, PPFAS (Parag Parikh Financial Advisory Services) and ITI Asset Management have launched a number of new fund offers that have witnessed good traction.
As a result of this, they have witnessed a significant growth in their AUM, she added.
For instance, Parag Parikh Conservative Hybrid Fund, which was launched last May, garnered an AUM of ₹680 crore.
Other funds such as Quant Infrastructure Fund have witnessed an AUM growth of over 69 per cent as of last December-end.
Launched last July, PGIM Small Cap Fund had seen inflow of ₹1,493 crore since its inception.
Most of the large fund houses had fewer option to launch new funds as they already had the complete range of products as prescribed by SEBI’s ‘Categorisation and Rationalisation of Mutual Fund Schemes’.
Despite this, SBI MF, ICICI MF, Birla MF and Nippon India MF had few successful NFOs.
Moreover, Krishnan noted that smaller mutual funds have managed to attract a portion of the increase in household savings due to cut down on leisure spending amid Covid.
Among beyond top-10 fund houses, the quarterly average AUM of PGIM India and PPFAS Asset Management have more than doubled to ₹14,693 crore and ₹21,678 crore in the last one year.
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