Increasing retail participation and positive equity markets helped top fund houses to register strong profits in financial year 2014-15. Several of top fund houses posted profits in the range of 15-50% in the last financial year as investors entered equity schemes to cash in on the rally. HDFC Asset Management Company (AMC), the country’s largest fund house in terms of assets continued to top the charts with net profit of over Rs 416 crore in FY15.
While ICICI Prudential AMC saw its net profit at R247 crore up by 35% in 2014-15. Reliance AMC’s profit surged by 18% at around R357 crore in FY15 as against R3.4 crore in FY14. Sundeep Sikka, president and CEO at Reliance AMC says, “I think our success can be contributed to the retail part of our business. Our efforts to increase retail participation, over the last few years, is finally paying off. Also, our focus was not on liquid funds but on sustainable long term equity money and we have succeeded in our intentions.” According to the latest report from Prime Database, the biggest increase among all the fund house was seen in retail equity of Reliance AMC, which surged by 119% at R18,414 crore in April 2015 compared to R8,410 crore in April 2014.
FY15 had turned out to be an outstanding year for the Indian mutual fund industry. While fund houses saw growth of 31% in their average assets under management (AAUM), they got net inflows of over R68,000 crore and saw surge in folios.
While top fund houses continued to register profits, Kotak Mahindra AMC saw net loss of R36.18 crore in FY15 as against net profit of R33.39 crore in FY14. A person with direct knowledge of the mater told FE on condition of anonymity said, “The loss might be for two reasons, first they acquired a fund house and secondly they expanded their business which required capital which led to post losses in the last financial year.” Last year, Kotak Mahindra AMC purchased the assets of PineBridge Mutual Funds.
While equity markets have turned volatile in the last few months and the outlook is not quite positive, the real test of the mutual fund industry will lie in attracting more retail investors and at the same time growing their business in such unstable market conditions.