scorecardresearchShare of small mutual funds continues to slide as industry grew rapidly

Share of small mutual funds continues to slide as industry grew rapidly

Updated: 08 Apr 2022, 09:51 AM IST
TL;DR.

Proportion of bottom 10 funds decline to 20 basis points in March 2022 from 62 bps in March 2016

The top ten mutual fund players manage around eight rupees out of every  <span class='webrupee'>₹</span>10 invested in Indian mutual funds.

The top ten mutual fund players manage around eight rupees out of every 10 invested in Indian mutual funds.

The share of the bottom rung of mutual funds by assets have been the worst affected in terms of market share over the last few years, even as the industry grew by leaps and bounds and the big players grabbed a bulk of the pie, reported Business Standard

The proportion of the bottom ten players fell to 20 basis points as a proportion of assets in March 2022 compared to 62 basis points in March 2016. It has been sliding steadily over the last few years, shows the data from the Association of Mutual Funds in India (AMFI).

The share of the top ten players has remained more or less steady, though the trend has broadly put them higher than they were in 2016. They manage around eight rupees out of every 10 invested in Indian mutual funds, wrote Business Standard.

Meanwhile, Bandhan Bank has acquired the ninth largest asset manager in association with a consortium. IDFC Mutual Fund had average assets under management of 1.2 trillion in the three months ending March 2022. This would give the bank a toehold in the asset management space, reportedly part of a larger expansion in financial services for the entity.

The bank is headquartered in Kolkata. It initially operated as a microfinance institution. It got a universal banking license in 2014. The entity serves underpenetrated regions in the eastern part of the country.

An analysis of state-wide numbers indicates the region is under-penetrated with respect to mutual funds.

The eastern region accounts for less a tenth of the total industry’s assets under management. The analysis considered Bihar, Jharkhand, Orissa, Sikkim and West Bengal; based on the ministry of home affairs' eastern zonal council composition. The region accounted for 6.1 per cent of assets in March 2022.

It was higher before the pandemic, at 7.7 per cent of total assets in December 2019 before the pandemic took hold.

The United Kingdom’s financial services regulator noted that the top ten asset managers accounted for 55 per cent of assets under management in a November 2016 interim report entitled ‘Asset Management Market Study’.

“Effective competition implies that firms have sufficient incentives to identify and satisfy clients’ demands as efficiently as possible and constantly seek to win the business of clients who use rivals’ services. The benefits of achieving effective competition include lower prices for investors, better quality service and greater innovation,” it said.

First Published: 08 Apr 2022, 09:51 AM IST