Most of the fund houses saw a decline in debt assets in the second quarter of the current financial year, a quarter marked by volatility in bond yield movements.
Of 43 fund houses, about 30 saw a decline in debt assets for the three months to September 2013 over the previous quarter, data collated from Value Research show. In absolute terms, ICICI Prudential MF (R7,017 crore), UTI MF (R2,981 crore) and Tata MF (R2,579 crore) saw the highest decline in debt assets during the period.
Ten-year government bond yields rose by about 127 basis points to 8.736% at the end of September from 7.463% at the end of June. RBI?s move to tighten liquidity in a bid to curb rupee?s fall had led to a spike in yields, affecting returns of long-term bond funds. Total debt assets for the industry fell 4% in the quarter.
However, for the year ended September, a majority of fund houses saw an addition in debt assets. Most large fund houses saw inflows, with Reliance MF (R12,613 crore), IDFC MF (R10,917 crore) and SBI MF (R8,942 crore) seeing the highest debt asset addition. In sum, the top 10 fund houses added R66,355 crore by way of debt assets. Among the losers, debt assets of Peerless MF (R1,976 crore), Tata MF (R1,539 crore), Taurus MF (R802 crore), IDBI MF (R685 crore) and Indiabulls MF (R637 crore) declined the most.
Overall, debt assets of the MF industry rose 15% to R5.79 lakh crore at the end of September 2013 from R5.02 lakh crore a year ago. In the same period, assets under management (AUM) of debt schemes in the overall asset mix rose to 76% of industry?s overall AUM from 71% a year ago, as per Amfi data.
However, not all fund officials are enthused with the increase in debt assets. ?Increased debt assets can compensate in terms of the total AUM of the industry, but it can?t provide for the loss of income owing to erosion in equity assets,? said Debasish Mallick, the managing director & CEO, IDBI Asset Management.
Fund houses take in asset management fees of anywhere between 100 bps and 150 bps for equity schemes. In contrast, while fees on long tenure bond funds can be as high as 50-100 bps, fees for the most commonly sold products such as FMPs and liquid funds are much lower and vary between 5-20 bps.