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Mutual Fund AAUM Data Reveals Very Disturbing Facts

Total quantum of money, managed by a mutual fund scheme, is known as the Assets Under Management (AUM). And, the average assets managed during a given period is known as AAUM (Average Assets Under Management).

Analysis of the corpus managed by the Indian mutual fund industry, during the 3-month period Jan-Mar 2016, reveals some very disturbing trends.

Following are some of the key observations, based on the study of the AAUM data sourced from the AMFI's (Association of Mutual Funds in India) website, for the period Jan-Mar 2016.

One. As on March 2016, the total number of Asset Management Companies (AMCs) registered with AMFI stand at 41.

Two. The total AAUM managed by these companies put together, aggregates to around Rs.13.60 lakh crores.

(As against this, the bank deposits are a massive Rs.100 lakh crores. In US, MFs manage more money than the banks. Clearly, the Indian mutual fund industry has a long way to go, to challenge the banks. Despite around 20 years of existence, they haven't been able to win the trust of the Indian investors. The mutual fund industry should ponder upon this.)

Three. Of this, more than Rs.7.55 lakh crores (i.e. 55% of total AAUM) are under the management of just 5 AMCs. In other words, 'mere five' companies manage more than half of the total mutual fund corpus in India.

Four. These five AMCs are 
- ICICI Prudential MF : Rs.1.76 lakh crores
- HDFC MF : Rs.1.76 lakh crores 
- Reliance MF : Rs.1.60 lakh crores
- Birla Sun Life MF : Rs.1.37 lakh crores
- SBI MF : Rs.1.07 lakh crores

In addition, there is one more company crossing the Rs.1 lakh crore mark i.e. UTI MF (Rs.1.06 lakh crores)

Five. Only 15 out of the total 41 AMCs, manage more than 90% of the total assets under management. The remaining 26 companies get to manage the balance mere 10% of the corpus.

Six. There are 24 AMCs that each manage an inconsequential sum of 1% of the total AAUM or less. These include LIC Nomura MF with Rs.13,156 crores AAUM (i.e. 0.97%), to as little as Rs.37 crores (i.e. 0.003%) managed by Shriram MF.

Seven. At around Rs.4.33 lakh crores, exposure to the equity-oriented funds works out to around 32%. Thus, the debt funds account for the bulk 68% of the mutual fund investment.

Worrying trends on the Assets Under Management of the Mutual Fund Industry.

Eight. Mumbai accounts for 41.54% of the AUM. Delhi comes a distant second at 14.19%.

Shockingly the AUM from cities like Bangalore and Chennai is a mere 6.01% and 4.69% respectively. I wonder why these cities are lagging so far behind in mutual fund investment, despite having a relatively young IT crowd and earning huge salaries. 

The story of other big cities such as Kolkata, Pune, Ahmedabad, Hyderabad, Jaipur, etc. is also pretty dismal and disappointing.

Nine. Contrary to popular perception, both Corporates and Retail Investors account for 50% each of the total AAUM.

Of course,
  • The debt liquid-fund segment is dominated by the Corporates with 88% share
  • In the debt non-liquid segment, Corporates and HNIs account for 92% share and the Retail a mere 8%. 
  • In equity funds, the share of the Corporates is only 15%, with Retail including the HNIs accounting for 85% AUM.
Ten. In terms of time, 
- Equity funds with more than 2 years holding period is around 37% and around 24% money is more than a year old.
- Debt funds are relatively very fresh, with around 27% corpus less than 1 month old. (This, of course, is due to high share of Corporates in the liquid funds, which is their short term surplus money).

Eleven. Among equity funds, HDFC Equity Fund gets the honour of being the largest fund, with assets of around Rs.14,375 crores. In other words, this one scheme has more money than the entire corpus of 24 AMCs each.

Its' cousin, the HDFC Top 200 Fund is not far behind at around Rs.11,717 crores AAUM. Thus, just these two HDFC schemes put together have more money than the entire corpus of 29 companies each. There are only 11 mutual fund companies with corpus exceeding these two schemes put together.

Here's the list of Top 10 Equity Funds based on their AAUM:
i.     HDFC Equity Fund : Rs.14,375 crores
ii.    HDFC Top 200 Fund : Rs.11,717 crores
iii.   ICICI Prudential Value Discovery Fund : Rs.11,224 crores
iv.   Birla Sun Life Frontline Equity Fund : Rs.10,684 crores
v.    Reliance Equity Opportunities Fund : Rs.10,406 crores
vi.   HDFC Midcap Opportunities Fund : Rs.10,295 crores
vii.  ICICI Prudential Focused Bluechip Equity Fund : Rs.9,965 crores
viii.  Axis Long Term Equity Fund : Rs.7,818 crores
ix.   Franklin India Prima Plus Fund : Rs.7,021 crores
x.    Franklin India Bluechip Fund : Rs.6,835 crores

Hence, our mutual fund industry is highly lopsided  not only in terms of few companies garnering the maximum corpus, but also that one city attracts a huge share for itself.

By the way, I had done a similar study about three years back (See : Interesting data on the AUM managed by Mutual Funds). As you will note, what is really surprising is that the trend on assets managed by the mutual fund industry has remained almost the same. There is absolutely no change in the overall pattern.

Given that mutual funds are the best investment for a retail investor (whether investing in equity, debt or gold), I sincerely hope that this huge imbalance in AAUM across different AMCs, Categories and Geographies is corrected soon. This is in the long term interest of the both the mutual fund industry and the investors.

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