The share of mutual fund assets under management (AUM) by foreign and predominantly foreign companies in India has declined drastically over the last fiscal, ended March 2009.
Assets managed by foreign and dominantly foreign asset management companies (AMCs) have fallen to 11.5 per cent of the total AUM of the industry, from 20.6 per cent in March 2008.
In other words, foreign mutual funds which managed more than one-fifth of the total AUM of the industry last year now manage a little over one-tenth of it.
The Indian AMCs accounted for 79.39 per cent of the total asset base of the industry as on March, 2008, while this has come up to 88.5 per cent as on March, 2009.
The classification of AUMs as foreign/Indian or predominantly foreign/Indian is according to the segmentation observed by the Association of Mutual Funds in India (the fund houses which have been classified as predominantly Indian has been taken as Indian AMCs).
“We classify mutual fund houses as Indian or foreign based on the ownership pattern in the AMC’s, said Mr A P Kurian, Chairman, AMFI. “While we cannot make a generalisation as to why foreign AMC-assets have fallen drastically, this could be because these fund house could be having more redemptions and less inflows”, said Mr Kurian.
Also, some of them have a different business plan and focus more on big ticket, high networth individuals, said Mr Kurian.
Fund managers also observed that there was a shift in ownership of some AMCs, from foreign to Indian.
Standard Chartered Plc sold its asset management business to the Indian, Infrastructure Development Finance Company (IDFC) in March last year.
Similarly in November, Delhi-based Religare Enterprises Ltd (REL) acquired Lotus India Asset Management Company, a predominantly foreign joint venture.
Another reason, according to Mr Rajan Krishnan, CEO of Baroda Pioneer AMC is that “the visible growth has happened in the top five-six AMCs during the past one year, which are Indian or majority Indian-owned.”
The global troubles faced by companies such as AIG impacted sentiment towards global fund houses operating in India, said the Chief Executive Officer of a fund house.
In some cases these AMCs had parked their investments in a single instrument or put huge money in real estate which then back-fired when the real estate sector suffered, said another fund manager.
The dominant foreign players have been lying low or losing money, said Mr Dhirendra Kumar, CEO of Value Research. One reason for their fall in assets was that that they were heavy on equity schemes which suffered as a result of the market fall during the year, said Mr Kumar. Domestic players do not have such an intense presence in equity.
Foreign firms have lately come under cloud, added Mr Kumar. The market in India has become far less receptive to global fund houses or brands, he said.
Assets managed by foreign and dominantly foreign asset management companies (AMCs) have fallen to 11.5 per cent of the total AUM of the industry, from 20.6 per cent in March 2008.In other words, foreign mutual funds which managed more than one-fifth of the total AUM of the industry last year now manage a little over one-tenth of it.
The Indian AMCs accounted for 79.39 per cent of the total asset base of the industry as on March, 2008, while this has come up to 88.5 per cent as on March, 2009.
The classification of AUMs as foreign/Indian or predominantly foreign/Indian is according to the segmentation observed by the Association of Mutual Funds in India (the fund houses which have been classified as predominantly Indian has been taken as Indian AMCs).
“We classify mutual fund houses as Indian or foreign based on the ownership pattern in the AMC’s, said Mr A P Kurian, Chairman, AMFI. “While we cannot make a generalisation as to why foreign AMC-assets have fallen drastically, this could be because these fund house could be having more redemptions and less inflows”, said Mr Kurian.
Also, some of them have a different business plan and focus more on big ticket, high networth individuals, said Mr Kurian.
Fund managers also observed that there was a shift in ownership of some AMCs, from foreign to Indian.
Standard Chartered Plc sold its asset management business to the Indian, Infrastructure Development Finance Company (IDFC) in March last year.
Similarly in November, Delhi-based Religare Enterprises Ltd (REL) acquired Lotus India Asset Management Company, a predominantly foreign joint venture.
Another reason, according to Mr Rajan Krishnan, CEO of Baroda Pioneer AMC is that “the visible growth has happened in the top five-six AMCs during the past one year, which are Indian or majority Indian-owned.”
The global troubles faced by companies such as AIG impacted sentiment towards global fund houses operating in India, said the Chief Executive Officer of a fund house.
In some cases these AMCs had parked their investments in a single instrument or put huge money in real estate which then back-fired when the real estate sector suffered, said another fund manager.
The dominant foreign players have been lying low or losing money, said Mr Dhirendra Kumar, CEO of Value Research. One reason for their fall in assets was that that they were heavy on equity schemes which suffered as a result of the market fall during the year, said Mr Kumar. Domestic players do not have such an intense presence in equity.
Foreign firms have lately come under cloud, added Mr Kumar. The market in India has become far less receptive to global fund houses or brands, he said.
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