How have the new mutual fund houses fared so far?

We look at their equity and hybrid funds' performance

How have the new mutual fund houses fared so far?

Money is where honey is. And with India's mutual fund industry managing close to Rs 40 lakh crore of public money, is it any surprise there are new players in the game?

Of the 40 fund houses at present, seven have come up in the last five years.

While three of them (Quant, Navi and WhiteOak) acquired existing businesses (Escorts, Essel and Yes) - ITI, Trust, Samco and NJ were granted fresh licences.

While gaining entry into the big boys' league is half the battle, winning the war is an altogether different test. It needs to secure the two Ps: Public love and Performance. So, it's time to whip out a bunch of green and red pens to assess the newcomers.

Besides Quant, all the new entrants have relatively smaller-sized assets under management (AUM), meaning they haven't caught the investors' fancy yet. (AUM is basically the total market value of their investment).

NJ is the second-largest on the list. But it should be noted that NJ Wealth, a distributor company, owns them. (Distributors are intermediaries who help investors like you and me to buy and sell mutual funds).

A deep-dive into the numbers - see chart 'Direct vs regular AUM' - suggests that 93 per cent of NJ's money has been funnelled through 'regular' plans. And since distributors essentially promote 'regular' mutual funds, it would be safe to say that NJ relies on their distribution network to attract investors.

Quant, meanwhile, is one such fund house that receives equal affection from direct investors and distributors alike. But do keep in mind that their direct-regular share also includes AUM that existed at the time of acquisition. So is it with Navi and WhiteOak, the other two fund houses that acquired existing businesses.

Last year's AUM growth looks impressive for Navi and WhiteOak, but that's mainly because they started from a low base.

Quant is the only fund house that actually grew at a faster pace than usual. Its AUM almost grew almost 200 per cent - from Rs 6,179 crore to Rs 18,310 crore - as against the entire mutual fund industry's 6.9 per cent.

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You need to know a few things to understand the performance table.

  • A fund has been labelled 'Good' if its performance falls among the top 33 per cent of its universe.
  • A fund has been labelled 'Poor' if its performance falls in the bottom 33 per cent of its universe.
  • Those in the middle 33 per cent are dubbed as 'Average'.
  • We only considered equity and hybrid funds that have completed a full year of performance.
  • Performance till March 15, 2023, has been considered
  • We have tracked their performance since their inception (ITI, Trust, Samco and NJ) or from the date they were acquired (Quant, Navi and WhiteOak).
  • We have compared these funds against their existing peers.

Quant is the only fund house flying the newcomer flag. In fact, their performance has been so good that it ranks as the best in almost all equity categories. That said, we should mention that it follows an unconventional strategy.

As far as the rest are concerned, they still have a lot of catching up to do.

Suggested read: Money Magnets of 2022

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