The country?s top fund houses have posted double-digit growth in their bottom line in FY14, aided by a rise in debt assets and higher expense ratio.

For the full year ended March 2014, net profit of five of the top 10 fund houses rose anywhere between 12% and 241%. HDFC MF, the largest AMC in terms of assets it manages, clocked a net profit of R358 crore, 12% higher than R319 crore in FY13.

ICICI Prudential MF posted a net profit of R183 crore for the full year ended FY14, a 73% rise over R110 crore posted a year ago, while SBI MF saw its profits rise 70% to R156 crore from R86 crore a year ago. Birla Sun Life MF?s profits rose 30% to R95 crore. Kotak AMC registered the biggest percentage rise in profits among top fund houses, with its net profit rising 241% to R41 crore.

According to Niranjan Risbood, director, fund research (India), Morningstar India, the increase in the expense ratio is the primary reason for the rise in profits of bigger fund houses in FY14. ?Fund houses have started charging extra to investors and the management fees have gone up a bit as well,? he said.

In September 2012, Sebi allowed funds to charge an additional total expense ratio (TER) to the extent of 30 bps if they get inflows from beyond the top-15 cities. Fungibility of expense ratio has also helped fund houses pocket higher AMC fees, earlier capped at 1% for equity schemes.

Risbood added the rise in debt assets was also responsible for the rise in profitability. Debt assets of three of these fund houses ? Birla Sun Life MF, HDFC MF and ICICI Prudential MF ? rose by over R14,500 crore in FY14. Growth in equity assets of the five fund houses was much more modest, with ICICI MF adding the most by way of equity assets of R4,591 crore.

While debt funds typically don?t generate as much revenue as equity funds, the inflows into debt funds last year helped provide a buffer at a time when equity fund inflows were slow. Asset management fees in debt schemes can vary anywhere from 5 and 10 bps for liquid funds to 50 and 100 bps for income funds, said experts. Equity schemes can fetch 100-150 bps. Experts believe that bigger MF players will continue to gain traction even as smaller players languish.