Market rally boosts mutual funds equity assets in Q3

Written by Ashley Coutinho | Ashley Coutinho | Mumbai | Updated: Jan 14 2014, 19:10pm hrs
The December quarter has proved to be a good one for MF houses, with a majority of them recording a rise in their equity assets during the period.

Of the 43 fund houses, 33 saw an increase in equity assets for the three months to December 2013 over the previous quarter, data collated from Value Research show. In absolute terms, ICICI MF (R1,731 crore), HDFC MF (R1,598 crore) and Reliance MF (R1,012 crore) saw the highest addition in equity assets during the period. HSBC MF (R42 crore) and Goldman Sachs MF (R20 crore) saw the most decline in equity assets.

Overall, equity assets rose 5% or by R8,209 crore during the quarter. At the end of the quarter, the top 10 fund houses contributed 84% to the total equity asset base of the MF industry, similar to the previous quarter.

The rise in the market, coupled with the launch of close-ended new fund offerings, helped the rise of equity assets, said Jimmy Patel, CEO, Quantum MF. The run-up in the market in the December quarter should hopefully encourage more retail investors to come back. The benchmark BSE Sensex rose about 9% during the quarter.

The rise in equity assets in good news for an industry that has been grappling with continual outflows in equity schemes. Equity MF schemes saw outflows to the tune of R1,239 crore in the December quarter but the months of November and December saw modest inflows of R927 crore and R 1,059 crore, respectively.

Sale of three new close-ended equity schemes brought in R847 crore in November, while that in two closed ended funds helped collect R627 crore in equity assets in December.

Equity assets are a lot stickier than debt assets and can generate higher revenues for the fund houses. Fund managers have been advising investors to continue their SIP portfolios even in tough times but long-term investors, who entered the market in 2007 and early 2008, have been particularly keen on exiting during market upmoves.

While the quarterly numbers are encouraging, most fund houses have, in fact, seen a decline in equity assets year on year. Equity assets declined by R19,274 in the three months to December 2013 over the year-ago period, with 33 fund houses seeing a decline in assets. Reliance MF (R5,339 crore), DSP BlackRock MF (R2,991 crore), HDFC MF (R2,411 crore) and UTI MF (R2,067 crore) saw the most erosion in their equity assets during the period. ICICI Prudential (R722 crore) and Axis MF (R578 crore) saw the most rise in equity assets.

Including non-equity categories, MF assets rose 8.4% to R8.77 lakh crore in the three months to December, the highest quarterly AUM till date. For CY13, assets grew 11% over the previous year compared with a 15% growth posted in CY12.