By Ashley Coutinho
The profitability of listed mutual fund players came under pressure for the quarter ended June amid weak markets and a regulatory diktat that prevented fund houses from hitting the market with with offerings.
HDFC AMC’s net profit slid 9% to Rs 314 crore over the year-ago period. The other three listed players – Aditya Birla Sun Life AMC, Nippon Life India AMC and UTI AMC – witnessed a sharper decline of between 33% and 39% in profits.
The total AUM of open-ended equity funds as of June 30 stood at Rs 12.86 trillion, down by 5.9% over the last quarter. Open-end equity funds form about 36% of the total open-end fund universe. The fall in assets has occurred despite the asset class witnessing net inflows during the quarter, and could be attributed to the market fall.
The S&P BSE 100 fell 9.13% while the BSE midcap and BSE smallcap fell 9.66% and 12.01%, respectively, during the quarter under review.
“Indian equities showed a dip in the June quarter and were down relative to the year-ago period. The flows did not keep pace with the market fall and were not able to neutralise the loss in revenues due to the dip in AUM. Fixed income performance was subdued as well with interest rates moving up,” said Dhaval Kapadia, director – portfolio specialist, Morningstar Investment Advisers India.
The open-ended fixed-income category had net outflows of Rs 70,213 crore in the first quarter of the fiscal, the third straight quarter of net outflows.
“The domestic economy as well as the mutual fund industry were impacted in Q1 due to macro headwinds. In this dynamic investment environment,
investors’ interest continues to be our prime focus. We remain committed to supporting our clients pursuing their long-term financial goals and add sustainable value,” said Sundeep Sikka, ED & CEO, Nippon Life India Asset Management.
Asset management companies were barred from launching new fund offers for much of the June quarter, as Sebi wanted the industry to comply with its norms on pooling of funds by intermediaries and distributors.
Higher employee wages, the move towards passives and increased competition from newer players also weighed on the sentiment.
AMC stocks have seen a sharp decline over the past year. Aditya Birla Sun Life AMC’s share prices have fallen 37% during the past year. HDFC AMC, UTI and Nippon AMC have shed 33%, 28% and 20%, respectively.