PSU fund houses score over pvt biggies in asset growth

Public sector mutual fund houses account for just a fifth of the total assets under management (AUM). But in relative terms, they have had a better run, compared to their private sector counterparts in 2009-10, when industry-wide assets grew 47% to Rs 6,13,979 crore. A similar trend was witnessed the year before, too. This indicates a preference for public sector fund houses in the period, following the crisis in financial markets in 2008.

Of the 38 fund houses which are currently operational in the country, only six funds houses — Unit Trust of India, Life Insurance Corporation, SBI Magnum, Baroda Pioneer, Canara Robeco and Principal PNB — can be categorised as those falling under the public sector, implying a ratio of 84:16 between the private and the public sector mutual fund players. It is no surprise then that private sector fund houses account for a predominant share of the assets

under management.

According to Sebi data, private players together accounted for about 78% of the industry wide assets under management at the end of financial year 2009-10. This is two percentage points lower than their market share in the preceding year.

If one were to consider the growth in assets over the past few years, private players clocked a 59% growth in their assets during the bullish phase of 2007-08. This was followed by a decline of more than 19% the following year when markets across the globe sold off. The rebound in 2009-10 led to an increase of about 43% in their assets last year.

In case of public sector fund houses, a growth of about 39% in the asset base in 2007-08 was followed by a decline of about 9% in the meltdown year of 2008-09. However, during the recovery phase of 2009-10, the assets of the public sector fund houses have jumped by nearly 66%. This is the highest in the past six years. In absolute terms, the public sector fund houses have seen their assets grow from Rs 82,000 crore in 2008-09 to more than Rs 1,35,000 in 2009-10.

Among the public sector fund houses, the largest percentage rise in the average assets under management during the period April ‘09-March ‘10 was accounted for by Baroda Pioneer (90%) followed by LIC which saw its assets rise by about 62%. Interestingly, both Baroda Pioneer and LIC have a higher proportion of debt assets compared to equity assets.

These statistics reflect investors’ changing preference for public sector mutual funds vis-à-vis the private sector ones. Industry officials says the collapse of some of the biggest names in the private sector financial organizations globally in 2008, could have partly contributed to this trend.

Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/analysis/PSU-fund-houses-score-over-pvt-biggies-in-asset-growth/articleshow/5823322.cms