Foreign MFs outpace domestic players in building assets

Assets rise 13% in first half, as local funds show a fall in AAUMs.

At a time the assets of domestic mutual funds are falling, those of foreign fund houses with presence in India, directly or through joint ventures, are growing remarkably.

Industry experts and chief executive officers attribute this to better products and the increasing familiarity of foreign funds with investors.

Statistics from the Association of Mutual Funds in India (Amfi) say foreign players’ assets rose 13 per cent in the first half of the current financial year. Domestic fund houses either registered negative or poor growth.

For instance, in the private sector, Indian-owned fund houses saw a dip of 7.5 per cent in average assets under management (AAUMs) to Rs 2,17,899 crore as on September 30 as against Rs 2,35,585 crore at the beginning of the year. Foreign players in the private sector saw a jump of 14.5 per cent in AAUMs at Rs 57,577 crore. These include AIG Global Asset, Fortis Investment, Franklin Templeton and Mirae Assets, among others.

So, too, in joint ventures (JVs) predominantly owned by foreign players, whose assets have risen by close to 10 per cent. The assets of funds where an Indian partner is dominant have grown a mere 1.4 per cent.

“Foreign-owned fund houses are aggressively marketing their products and investors are getting familiar with them. Moreover, their products are equally good performers,” said Dhruva Chatterji, senior research analyst at Morningstar India, an independent investment research firm.

“If the products are structurally well-positioned and perform well, I see no problem why people should not invest with us,” said the chief executive officer (CEO) of a foreign-owned fund house. He said foreign players faced intense competition, as domestic counterparts and banks-sponsored asset management companies had the advantage of a strong distribution network.

Bank-sponsored fund houses SBI MF and Canara Robeco put together grew assets by 6.8 per cent.

In agreement with this, another CEO of a fund house in a JV with a foreign partner said, “In metros, the brand equity of foreign-owned houses has strengthened. The competition now is to penetrate Tier-I & II cities, which offer huge potential.”

In the first half, the average assets dipped 4.6 per cent to Rs 7,13,290 crore from Rs 7,47,525 crore. Of the 41 fund houses in the country, 14 are fully or majority owned by foreign players.

Source: http://www.business-standard.com/india/news/foreign-mfs-outpace-domestic-players-in-building-assets/416955/