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Axis Bank Enters Mutual Fund Space

The bank has received the final permission from SEBI to set up India’s 37th fund house

The mutual fund family is getting larger by another member. The latest to get the nod from the Securities and Exchange Board of India (SEBI) to set up an asset management company (AMC) is Axis Bank. The first of its products (both equity and debt) are likely to hit the markets sometimes in October/November.

This will be the latest fund house to be launched since Shinsei was, in February 2009.

Ascribing the reason for the entry was Rajiv Anand, MD & CEO of Axis AMC, “The asset management industry in India is amongst the fastest growing financial services businesses across the globe. With a growth rate of over 30 per cent compounded annual growth rate (CAGR) during the last 6 years, the fund business presents an interesting opportunity.”

Although it is entering a crowded market that already has well-established players as well as some new ones, Axis Mutual Fund believes that it can make a difference to the investor. Anand explains, “We think that there is great merit in delivering solutions rather than just launch products. It is this investor-centric approach built on customer oriented communication, long-term relationships and enduring wealth creation that will seek to differentiate Axis MF.”

According to the management, quick growth is going to be targeted and that means taking the fund house into the top 10 funds’ list within 4 to 5 years. The competition for that is going to be tough as there are already some 36 fund houses already in existence in India, but there is scope for quick growth as less than 3 per cent retail penetration has been possible by them.

However, the argument against this is that there have been 6 mutual fund launches since 2007, and they fail to account for even 1 per cent of the total assets of the industry. If you stretch the canvas further, since 2005, 9 have been launched which account for 4 per cent of total assets of the industry.