Small fund houses struggle to stay afloat

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SummaryIt was another bleak year for the small fund houses, with most of them continuing to report losses in financial year 2013.

to have benefited from its focus on the equity segment. The firm turned profitable in FY13 with a net profit of R5.2 crore compared with a loss of R3.09 crore in FY12, with its revenues growing by R3 crore and expenses shrinking by R3.4 crore. “We have not distracted ourselves by doing too many things and remain focussed on equity products, which has been our core strength,” said Aashish Somaiyaa, CEO, Motilal Oswal AMC. The AMC's assets grew by about R170 crore in FY13, the bulk of it in the equity segment.

Mirae Asset swung to a profit of R1.1 crore in FY13 from a loss of R3.8 crore the previous fiscal, chiefly on the back of reduced expenses and cost-cutting measures. Daiwa AMC, which decided to sell its assets to SBI Funds Management, also ended in the black with a net profit of R0.05 crore against a loss of R2.65 crore in FY12.

Experts believe that tough times are likely to continue for small AMCs in FY14 as well.

“Over the past year or so, the bigger AMCs have grown bigger and cornered the bulk of fresh inflows. It will be difficult for the smaller AMCs, which don't have an established distribution channel, to differentiate themselves in an industry which seems a bit over-crowded at present,” said Chatterji.

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