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MF AUM Seen at Rs 15-18 Lakh Crore

A KPMG study said that mutual fund assets are bound to grow, but profits may elude

Provided the Indian economy revives quickly enough, the Indian mutual funds industry has the potential to increase by 15-25 per cent over the next 5 years, said a CII-KPMG study which was released at a CII-sponsored summit in Mumbai on Wednesday.

In case that happens then, by the year 2015, the industry could possibly harbour assets under management (AUM) of Rs 15-18 lakh crore.

Depending on the pace of economic growth, the industry’s progress may increase or decrease, said the study. In case of quick economic growth, the pace could be upped to 22-25 per cent and in case the economy grows slowly, then the pace of the mutual fund industry’s growth will fall to 15 to 18 per cent.

The main reasons that would push faster growth is dependent on what the industry does, said the study and increasing retail participation may play a crucial role. However, the study underlined the fact that institutional participation too must be encouraged further even though it is a dominant factor in the industry already.

Although all of this was music to the ears of the industry, yet the study said that growth may not translate into big profits. In fact, the study said profitability is likely to slip.

The reason ascribed to this was the asset management companies (AMCs) desire to float low-margin products to attract retail investors, especially those resident in far flung areas away from the main cities, which increases cost without helping boost profitability to any great extent. While these can generate the numbers and lots of cash, yet they are not the source of great profits in the short- or medium-term.

Here are the profits and losses booked by AMCs in 2008 (UTI AMC tops the list with a net profit of Rs 143.46 crore):


Profit/Loss Point
Asset Management Company (AMC)   2008*
ABN AMRO Asset Management   -2.68
AIG Global Investment   -36.17
BOB Asset Maanagement   2.19
Benchmark Asset Management   6.19
Bharti AXA Investment Managers   -15.53
Birla SunLife Asset Management   2.77
Canbank Investment Management Services   -9.90
DBS Cholamadalam Asset Management   -1.62
DWS Investments   3.44
DSP ML Fund Managers Limited   28.05
Edelweiss Asset Management Limited   N/A
Escort Asset Management Limited   N/A
Fidelity Fund Management   46.55
Franklin Templeton Asset Management   103.77
HDFC Asset Management   117.74
HSBC Asset Management   9.88
ICICI Prudential Asset Management   82.10
IDFC Mutual Fund   N/A
ING Investment Management   -39.55
JM Financial Asset Management   N/A
JPMorgan Mutual Fund   N/A
Kotak Mahindra Asset Management   1.03
LIC Asset Management   12.56
Lotus India Asset Management**   -21.95
Mirae Asset Global Investment Management   N/A
Morgan Stanley Investment Management   0.73
Principal PNB Asset Management   7.37
Quantum Asset Management   -0.18
Reliance Capital Asset Management   96.18
Sahara Asset Management   -2.10
SBI Funds Management   70.37
Sundaram BNP PARIBAS Asset Management   18.50
Tata Asset Managemement   28.22
Taurus Asset Management   3.19
UTI Asset Management   143.46
Total   654.61
*Figures in Rs (cr)
**Lotus was taken over by Religare on 4 November, 2008
N/A: Not Available