2020 : AUM, AMC & ANALYSIS
In 2020, the total market capitalisation of the companies listed with the BSE increased by 20.67 per cent. Nonetheless, the increase in AUM of domestic mutual fund was led by a rise in the AUM of debt-oriented schemes, equity-oriented schemes and others that included ETFs
The year 2020, which will go down in history as the year of the pandemic, saw the Indian domestic mutual fund industry’s assets grow by almost 11 per cent on a yearly basis. This was despite the last six months of the year witnessing a continuous outflow from equity-dedicated funds. Nonetheless, most of it was made up by the rise in the Indian equity market. In 2020, the total market capitalisation of the companies listed with the BSE increased by 20.67 per cent.
The increase in AUM was led by a rise in the AUM of debt-oriented schemes, equity-oriented schemes and others that included exchange traded funds (ETFs). Even in debt-oriented funds, the AUM of corporate bond funds and short duration bond funds increased by 97 per cent and 63 per cent, respectively, on a yearly basis, that led to an increase in the AUM of debt-oriented funds. The categories that pulled the overall AUM down were hybrid schemes and close-ended schemes. Among the debt-oriented funds, which form 46 per cent of the total domestic mutual fund industry’s AUM, liquid funds had a lion’s share.
Liquid Funds’ Domination
The category that dominates the Indian domestic mutual fund industry is the liquid fund where institutional investors are very active. Liquid funds contribute about 14 per cent of the total domestic mutual fund industry’s AUM with Rs 3.9 lakh crore. Out of the top 10 major fund categories in terms of AUM, only two are from equity while the rest are from the debt category.
HDFC MF: Largest in Liquid Funds Category
The fund house that dominates the liquid fund category is HDFC AMC. At the end of December 2020, it held 16.8 per cent of the industry’s assets followed by SBI AMC and ICICI Prudential AMC that had a market share of 13 per cent and 11 per cent, respectively, during the same period.
SBI MF: Largest AMC in 2020
SBI AMC grabbed the pole position in the domestic mutual fund industry. It became the first AMC in India to cross asset under management of Rs 4 lakh crore.
The category that contributed most to SBI MF becoming the largest AMC is ‘other ETFs’. In 2020, it saw its AUM increasing by 33 per cent and now forms around 26 per cent of the total AUM of SBI AMC at the end of 2020. SBI MF, along with UTI MF, corners 70 per cent of the industry’s other ETFs’ AUM. The reason for such a large share is the inflows it receives from the Employees’ Provident Fund Organisation (EPFO). In recent years it has been one of the biggest contributors to flows into exchange traded funds that bet on the Sensex and Nifty.
The retirement fund manager pumps 15 per cent of the corpus into equities though ETFs run by SBI Mutual Fund and UTI Mutual Fund. Returns always remain at the top of the mind for an investor and are reflected in the change in AUM and returns by the funds. The table below shows the top 10 funds in terms of asset size, number of funds managed by them and how many of them have been beating the benchmark in the last three months and one-year period
We see that Kotak Mahindra AMC remains one of the best gainers in terms of AUM and 96 per cent of its funds have outperformed its benchmark.
Top AMC in Equity-Oriented Category
HDFC MF, the second-largest AMC in India, has the largest share of equity-dedicated funds in the domestic mutual fund industry. However, in the last one year it has come down both in absolute and percentage terms and yet continues to rule the roost. The top 10 fund houses share three-quarters of the total industry equity AUM. Mirae MF, Axis MF and Kotak Mahindra MF are the major players that have gained market share in equity-dedicated funds.
Top AMC in Debt Category
Like equity, even in the debt category HDFC MF has dominated the category with little more than 15 per cent of the market share. This is followed by ICICI Prudential MF and SBI MF having a share of 14 per cent and 13.8 per cent, respectively.
Top MF in Hybrid Category
The hybrid category of MF schemes is the one that invests in both equity and debt as per the mandate. The market leader in this segment is ICICI Prudential AMC. This category as a whole saw its AUM declining in 2020. Most of the top fund houses maintained their ranking other than Nippon India MF that lost its fourth rank to Kotak Mahindra MF. All the major AMCs saw their AUM declining in 2020.
Going by the above analysis, we see some measure of change in the ranking of the AMCs. This change has primarily come about due to better performance of the funds of fund houses such as Kotak MF and Axis MF while others like SBI MF and UTI MF benefited from institutional inflows. The other major winner in 2020 was ETF – its market share increased by 2 per cent in the last one year ending December 2020.