The AUM play

Some interesting insights from the analysis of the change in the assets of the mutual fund industry over the last five years

The mutual fund industry continues to expand rapidly, with its AUM (assets under management) more than tripling in the last five years. At the end of 2013. the top 10 AMCs commanded 80 per cent of the industry assets. They still account for an imposing 83 per cent at the end of 2018. And you see the same familiar names comprising the list of top 10. with just one change: IDFC Mutual Fund has made way for Axis Mutual Fund. But scratch the surface and you come across some interesting observations.

The blg equlty shlft
The industry has been growing at a remarkable pace but what’s more impressive is how the composition of assets has changed over the last five years. Back in 2013, debt funds had a massive 72 per cent share of the industry AUM, while equity funds accounted for just 20 per cent. Fast forward to 2018 and equity funds now have a 34 per cent share of the assets. The hybrids have grown well, too (see the first graphic). This clearly points towards the rising popularity of equity funds among retail investors.

Game of thrones
HDFC AMC was, and continues to be, the biggest fund house of the country. Its dominance has only increased in the last five years, with its market share now touching 14.28 per cent of the total industry AUM. With over ₹3.5 lakh more under its management, it is bigger than the combined AUM of the bottom 28 AMCs in an industry of 39! But dig a level deeper and you see a significant shift at the asset-class level (see the second graphic). The firm’s share of the industry’s equity fund AUM has dropped significantly from 19 per cent at the end of 2013 to around 11 per cent now.

In the last five years, its equity-fund AUM has grown at a much slower pace than that of most other industry players. leading to a drop in its relative market share. But on the brighter side, it has emerged as the largest debt fund manager in India. displacing ICICI Prudential fiom the top slot. Riding on the astonishing growth in the assets of its liquid fund, the firm now commands an impressive 15 per cent share of the industry’s debtfund AUM to claim the pole position.

SBI AMC has scripted a remarkable growth story to emerge as the country’s top equity fund manager. Its share of the industry’s equity-fund AUM has grown from 8 per cent back in 2013 to over 14 per cent now, placing it at the top of the pecking order and comfortably ahead of HDFC’s 11 per cent market share. Note that these numbers exclude the equity component of hybrid funds. The AMC’s Nifty ETF has been the prime beneficiary of EPFO’s investments in exchange-traded funds since 2015, as a result of which the fund’s AUM has swelled to over ₹41,000 crore. Overall, SBI has made a big move to become India’s third largest AMC, with AUM of ₹2.6 lakh crore. overtaking Reliance, Aditya Birla Sun Life and UTI.

The trallblazers
Backed by some solid performance numbers, three relatively late entrants have scripted a gravity-defying climb up the AUM hierarchy. Mirae Asset Mutual Fund, which commenced operations in 2007, has significantly moved up the AMC ladder from the 33rd position in 2013 to the 16th position now. Strong growth in both debt and equity segments has contributed to its meteoric rise. Mirae has achieved this feat without the backing of a well-established Indian promoter group.

Motilal Oswal. another young AMC which launched its first scheme in 2010. has also made a mark. Its growth has largely been on the back of one fund — Motilal Oswal Multicap 35, which accounts for 69 per cent of the total AMC’s assets. Barring a few times. the multicap fund since its launch in 2014, has been trending upwards in terms of its AUM. Axis Mutual Fund is another one which has scripted a fabulous growth story. Not even a decade old in the industry, it is currently ranked ninth by size, up from the 15th rank it held in 2013. The main driver of this leap has been its tax-saver Axis Long Term Equity Fund, contributing almost half to the growth of the AMC’s equity AUM. There is no AMC other than Axis where an ELSS has emerged as the flagship equity product.