India’s mutual fund industry crossed the $100 billion milestone

By: Vipin Agnihotri The Indian economy crossed number of milestones last month. During the month, in fast succession, the India’s GDP and BSE's market capitalization crossed the $1 trillion mark. Now, it has come into the notice of The India Street that the India’s mutual fund industry crossed the $100 billion milestone. Last week, assets under management (AUM) by 29 fund houses, released by Association of Mutual Funds in India (AMFI), was pegged at Rs 4.07 lakh crore. Theoretically speaking, at the present rupee-dollar exchange rate of 40.52, this translates into a little over $100 billion. “This milestone was reached on the back of a 16% rise in industry AUM in May over the previous month and a 48% jump over the May 2006 figures,” pointed out Kadambari Murli, noted economist in India. When The India Street contacted top industry officials in this regard, they said that plenty of factors led to this high growth of AUM last month. First and foremost, as call rates fell below 1% level during the last few days of May, substantial amount of funds had flown into liquid funds rather than being invested in the overnight call money market. This in turn gave a boost to the industry AUM.

Apart from that, in May a big number of funds had launched fixed maturity plans (FMPs) which too played a prominent part in boosting the industry AUM. For example, Lotus India MF had a number of FMPs last month and its total assets rose nearly 74% to Rs 3,623 crore now. In addition, a steady stock market and the fund houses' strategy to acquire investors for the long-term also paid off. "The high growth of AUM vindicates our year-old strategy of aggressively acquiring customers. In May, we got about 70,000 new accounts," pointed out Vikrant Gugnani, president & CEO, Reliance Mutual Fund. The pivotal factor here is that at the fund house level, Reliance MF maintained its position at the top of the AUM league table with Rs 59,143 crore under management. Last month, Reliance MF's AUM grew by a whopping 10,315 crore (21%). ICICI Prudential MF and UTI MF too retained their places in the AUM pecking order. With an AUM of Rs 50,703 crore Pru-I MF was at the second position and with Rs 40,070 crore, UTI MF was at the third position. According to experts, in the case of UTI MF, other than inflows in its liquid funds and FMPs, its 'focus fund offer', a basket offering of some of its existing high-performing equity schemes through distributors brought in good money. "Our equity corpus also witnessed good inflows through the SIP (systematic investment plan) route,” pointed out Jaideep Bhattacharya, chief marketing officer, UTI MF.