Equity asset base of mutual fund houses declines Rs 5,000 cr

Mutual fund houses collectively witnessed an erosion of nearly Rs 5,000 crore in their equity base in FY13, a period when the benchmark BSE Sensex gained more than 8% – Reliance Mutual Fund saw the highest decline in its equity base.

L&T Mutual Fund, IDFC Mutual Fund and Axis Mutual Fund saw the highest addition in equity assets in FY13. L&T MF added Rs 4,337 crore of equity assets, thanks to its merger with Fidelity MF during the year, data collated from Icra Online show.

IDFC MF and Axis MF added Rs 580 crore and Rs 472 crore, respectively. Collectively, the 43 fund houses lost Rs 4,883 crore in equity assets in FY13, with 24 fund houses seeing a decline in their equity assets compared with 16 that saw an addition.

The other two players, which added more than R100 crore in assets, were ICICI Prudential (Rs 131 crore) and Goldman Sachs (Rs 101 crore). HDFC MF, the largest fund house in terms of assets, saw a modest addition of Rs 26 crore in its equity base.

It must be noted that about 54%, or 134 out of 248 diversified equity schemes, have outperformed their respective benchmark indices in FY13.

Reliance MF saw the highest decline in its equity base of Rs 3,212 crore, followed by Sundaram MF (Rs 1,566 crore) and DSP BlackRock MF (Rs 1,362 crore). Other fund houses that saw a significant decline in their equity assets include UTI MF (Rs 893 crore), SBI MF (Rs 881 crore) and Tata MF (Rs 879 crore).

Of the top 15 fund houses, as measured by equity assets at the end of March 2012, all but three fund houses (HDFC MF, ICICI MF and IDFC MF) saw a net decline in equity assets in FY13.

Despite the significant erosion, Reliance MF is still the second largest fund house in terms of equity assets, followed by UTI MF, ICICI MF, SBI MF and Franklin Templeton MF. However, DSP BlackRock MF has slipped to the eight position, ceding the seventh spot to Birla Sun Life MF.

?The last fiscal has seen substantial outflows in equity schemes and that is reflecting in the erosion in total equity base of the various fund houses,? said Dhruva Chatterji, senior research analyst, Morningstar India.

Equity MF schemes saw outflows of Rs 12,931 crore in FY13, including nine consecutive months of outflows from June to February. Outflows gained pace post September last year as the market rallied to new highs. Also, more than 44 lakh equity folios closed in FY13, the most in the last nine fiscals, with the month of December seeing the closure of more than six lakh equity folios.

The proportion of equity assets have declined from 38% at the end of March 2007 to about 26% at the end of FY13, according to Icra Online. This is despite the fact that equity assets grew about 47% from Rs 1.17 lakh crore to 1.73 lakh crore in the same period.