Another fund official opined that while higher capital may not be required in good times, it can come in handy in difficult situations. “During tough times, a fund house’s AUM and revenues may decline but the fixed costs remain the same. Additional capital can be useful in these situations,” he said.
The assets under management of the bottom 10 fund houses stood at a paltry R3,546 crore, just 0.4% of the industry’s overall AUM base (excluding domestic fund of funds) for the period ending September 30, 2013. In contrast, the top 10 fund houses contributed 79% to the total industry asset base. However, experts pointed out this was nothing new and that the Indian MF industry has always been ‘top-heavy’.
Those in favour of maintaining the status quo also argued that size itself did not guarantee the fund house had quality and long-term assets, particularly if the assets were mostly in short duration debt funds.