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Which fund house is the 2017 growth champion?

The WF Mirror Report 2017

Vijay Venkatram, Managing Director, Wealth Forum

13 January 2018

We present the 4th annual edition of our Mirror Report (titled after an adaptation of the fabled phrase “Mirror on the wall, who is the fastest of them all?”) – which analyses business growth of fund houses over the calendar year 2017 as well as over the current bull phase for the industry, which started in 2014 and has accelerated significantly over these 4 years.

Previous Mirror Reports Mirror Report 2016 Mirror Report 2015 Mirror Report 2014

As always, we have divided fund houses into 3 categories: The Leaders (Top 10), The Challengers (Next 10) and the Aspirers (Rest of fund houses).

Champions of the 4 year industry Bull Run

The first data table traces AuM growth by fund house for the 4 year period January 2014 to December 2017. Data considered therefore is quarterly AAuM for the period Oct-Dec 2013 as the starting point and Oct-Dec 2017 as the end point. Which fund houses have made best use of industry tailwinds and which ones turned out to be laggards in this bull phase? Have the bigger fund houses grown faster than the smaller ones or has a rising tide lifted smaller companies faster? Let’s find out.

Fund HouseAAuMAAuMGrowth over Growth over
 Oct - Dec 17Oct - Dec 134 Years Ago4 years Ago %
 Rs.Crs.Rs. Crs.Rs. Crs. 
Leaders
ICICI Prudential Mutual Fund293,337 97,191 196,146 202%
HDFC Mutual Fund289,167 108,990 180,177 165%
Reliance Nippon Life MF243,593 106,334 137,259 129%
Aditya Birla Sun Life MF241,106 84,998 156,108 184%
SBI Mutual Fund205,391 64,561 140,830 218%
UTI Mutual Fund153,364 74,351 79,013 106%
Kotak Mahindra MF119,799 35,758 84,041 235%
Franklin Templeton MF99,803 44,258 55,545 126%
DSP BlackRock Mutual Fund86,254 32,641 53,613 164%
Axis Mutual Fund73,371 14,587 58,784 403%
Total - Leaders Group1,805,185 663,669 1,141,516 172%
Challengers
IDFC Mutual Fund71,388 41,248 30,140 73%
L&T Mutual Fund60,313 17,003 43,310 255%
Tata Mutual Fund48,906 19,723 29,183 148%
Sundaram Mutual Fund36,267 16,024 20,243 126%
Invesco Mutual Fund24,122 13,706 10,416 76%
DHFL Pramerica MF23,493 20,639 2,854 14%
LIC Nomura Mutual Fund22,114 10,010 12,104 121%
JM Financial Mutual Fund16,633 7,192 9,441 131%
Motilal Oswal Mutual Fund15,761 434 15,327 3529%
Mirae Asset Mutual Fund13,467 582 12,885 2213%
Total - Challengers Group332,464 146,560 185,904 127%
Aspirers
Canara Robeco Mutual Fund12,256 6,922 5,334 77%
HSBC Mutual Fund11,251 7,652 3,599 47%
Indiabulls Mutual Fund11,099 1,225 9,874 806%
Baroda Pioneer Mutual Fund11,084 7,217 3,867 54%
IDBI Mutual Fund10,653 5,213 5,440 104%
Edelweiss Mutual Fund9,999 13,095 -3,096 -24%
BNP Paribas Mutual Fund7,499 3,674 3,825 104%
Principal Mutual Fund6,624 4,547 2,077 46%
BOI AXA Mutual Fund5,255 1,760 3,495 199%
Union Mutual Fund3,937 2,266 1,671 74%
Mahindra Mutual Fund2,821 - 2,821  
Quantum Mutual Fund1,181 329 852 259%
Essel Mutual Fund1,147 - 1,147  
IL&FS Mutual Fund (IDF)1,114 - 1,114  
PPFAS Mutual Fund924 312 612 196%
IIFL Mutual Fund731 225 506 225%
IIFCL Mutual Fund (IDF)641 - 641  
Taurus Mutual Fund597 3,223 -2,626 -81%
Escorts Mutual Fund245 280 -35 -12%
Sahara Mutual Fund66 194 -128 -66%
Shriram Mutual Fund42 24 18 77%
Total - Aspirers Group99,166 58,158 41,008 71%
Total Industry2,236,815 868,387 1,368,428 158%

A few observations:

1. Between 2016 and 2017, some notable changes have taken place in the composition of the 3 groups. Axis MF storms into the Leaders group on the back of sustained high growth, as do Mirae Asset and Motilal Oswal into the Challengers group. Our heartiest congratulations to these 3 fund houses for literally taking their businesses to the next level.

2. The industry can look back with tremendous satisfaction on the distance traversed over the last 4 years. From an AuM of Rs. 8.68 lakh crs at the end of 2013, a combination of business growth and favourable markets have taken AuM to as much as Rs. 22.36 lakh crores as of Dec 2017: a 2.5x growth in just 4 years!

3. The industry seems to be growing as well as consolidating at the same time: the Leaders have grown the fastest, followed by the Challengers and then by the Aspirers. The big are getting much bigger, market share is getting more consolidated at the top.

4. The “Power Play” segment of the industry – which is the Top 5 fund houses - reveals an interesting insight:

Fund HouseAAuMAAuMAAuMAAuM
 Oct - Dec 17Oct - Dec 134 Years Ago4 years Ago %
 Rs. Crs.Rs. Crs.Rs. Crs. 
Leaders
SBI Mutual Fund205,391 64,561 140,830 218%
ICICI Prudential Mutual Fund293,337 97,191 196,146 202%
Aditya Birla Sun Life MF241,106 84,998 156,108 184%
HDFC Mutual Fund289,167 108,990 180,177 165%
Reliance Nippon Life MF243,593 106,334 137,259 129%

SBI MF and ICICI Pru have made the most of this bull market in terms of business growth – and both have been rewarded in these four years – I Pru by taking the pole position and SBI MF by muscling its way into the Top 5. The pole position is now a very closely fought race between ICICI Pru and HDFC MF, with the latter covering significant ground in 2017 after a relatively slower 2015 and 2016. The next quarter (Jan-Mar 2018) could perhaps see a handing over of the baton on the pole position in the industry, if recent trends sustain. The other big fight within the Power Play segment is for the 3rd position: Aditya Birla Sun Life MF, with its sustained impressive growth in these 4 years, is now just a whisker away from Reliance MF for the 3rd spot on an AAuM basis – and, if current trends persist into the next quarter, we could well see a change in the No.3 position. Reliance MF, on the back of its impressive equity fund performance in 2017, will undoubtedly seek to turbo charge its growth in 2018, to make up for lost time in the earlier part of these 4 big years.

5. Among the Leaders, Kotak MF and Axis MF have grown significantly faster than industry in these 4 years, and have consequently seen impressive jumps in their league tables positions.

6. The Challengers group seems like a mixed bag, with L&T MF leading the way among the bigger challengers, growing way ahead of industry while others have struggled a bit to keep pace with the fast clip of industry growth. Bringing up the rear of the Challengers group are two supersonic speed engines – Mirae Asset and Motilal Oswal – who have charged into the Challengers group with hugely impressive growth rates which are in the thousands and not hundreds, albeit on low bases. In terms of absolute AuM growth, their numbers beat fund houses that are up to 4 positions higher than them on the Challengers league table. It does appear – based on the last 4 years – that all the fund houses in the Challengers group are not really challenging the leaders – its just a handful who are really doing this for the group. Which explains the fact that the Challengers as a whole have grown relatively slower than the Leaders, despite having smaller bases as starting points.

7. The Aspirers group – barring a few bright spots – has continued to disappoint over these 4 big years, growing at half the industry growth rate. Inability to make the most of favourable tail winds does point out to some strife in this segment of the industry – which may continue to see some consolidation in the years ahead.

Growth champions of 2017

Lets now turn our attention to the big year that’s just concluded. Which fund houses have emerged as the growth champions of 2017? In determining this, we have stuck to last year’s template – which is two levels of analysis – the first one is the overall AuM growth metric and the other is a weighted average growth across asset classes, with a 1.5x weight for equity, 1x for debt and 0.5x for cash assets.
Here’s how the fund houses stack up on %age growth in overall AuM:

Fund HouseAAuMAAuMGrowth over Growth over
 Oct - Dec 17Oct - Dec 161 yr Ago1 year Ago %
 Rs. CrsRs. CrsRs. Crs. 
Leaders
Axis Mutual Fund73,37149,281 24,090 49%
DSP BlackRock Mutual Fund86,25458,357 27,897 48%
Kotak Mahindra Mutual Fund119,79982,135 37,664 46%
SBI Mutual Fund205,391140,997 64,394 46%
Aditya Birla Sun Life MF241,106180,808 60,298 33%
Franklin Templeton MF99,80375,783 24,020 32%
HDFC Mutual Fund289,167221,825 67,342 30%
ICICI Prudential Mutual Fund293,337227,989 65,348 29%
Reliance Nippon Life MF243,593195,845 47,748 24%
UTI Mutual Fund153,364129,389 23,975 19%
Total - Leaders Group1,805,1851,362,409 442,776 32%
Challengers
Motilal Oswal Mutual Fund15,7617,131 8,630 121%
Mirae Asset Mutual Fund13,4676,343 7,124 112%
L&T Mutual Fund60,31335,191 25,122 71%
Sundaram Mutual Fund36,26727,013 9,254 34%
Tata Mutual Fund48,90638,271 10,635 28%
IDFC Mutual Fund71,38857,998 13,390 23%
JM Financial Mutual Fund16,63313,522 3,111 23%
LIC NOMURA Mutual Fund22,11418,022 4,092 23%
Invesco Mutual Fund24,12223617 505 2%
DHFL Pramerica23,49324,807 -1,314 -5%
Total - Challengers Group332,464251,915 80,549 32%
Aspirers
Mahindra Mutual Fund 2,821 1,457 1,364 94%
BOI AXA Mutual Fund5,2552,896 2,359 81%
IIFL Mutual Fund731424 307 72%
IIFCL Mutual Fund (IDF)641399 242 61%
Edelweiss Mutual Fund9,9996,826 3,173 46%
Quantum Mutual Fund1,181858 323 38%
IDBI Mutual Fund10,6537,761 2,892 37%
PPFAS Mutual Fund924676 248 37%
Principal Mutual Fund6,6244,868 1,756 36%
Canara Robeco Mutual Fund12,2569,411 2,845 30%
HSBC Mutual Fund11,2518,670 2,581 30%
Union Mutual Fund3,9373,056 881 29%
BNP Paribas Mutual Fund7,4996,032 1,467 24%
Essel Mutual Fund1,147945 202 21%
IL&FS Mutual Fund (IDF)1,114995 119 12%
Shriram Mutual Fund4238 4 11%
Indiabulls Mutual Fund11,09910,227 872 9%
Baroda Pioneer Mutual Fund11,08410,785 299 3%
Escorts Mutual Fund245286 -41 -14%
Taurus Mutual Fund5972,339 -1,742 -74%
Total Aspirers Group99,10078,949 20,151 26%
Total Industry2,236,7491,693,273 543,476 32%

 

 

Here’s another way of looking at the same growth – this time by drilling down into growth by asset class and assigning weights to each asset class (1.5x for equity, 1x for debt and 0.5x for cash) to get us a notional weighted average AuM growth – which we believe is a reasonable proxy for growth in quality assets.

Fund HouseAAuMGrowth over EquityDebtCashWeightedWeighted
 Oct - Dec 171 yr AgoGrowthGrowthGrowthGrowthGrowth over
 Rs. CrsRs. Crs.Rs.Crs.Rs.Crs.Rs.Crs.Rs.Crs.1 yr ago %
Leaders
DSP BlackRock Mutual Fund86,254 27,897 16,534 6,543 4,782 33,735 64%
Axis Mutual Fund73,371 24,090 13,382 1,981 8,840 26,474 56%
Kotak Mahindra Mutual Fund119,799 37,664 21,294 6,758 5,378 41,388 53%
HDFC Mutual Fund289,167 67,342 58,810 7,546 1,104 96,313 50%
Franklin Templeton MF99,803 24,020 12,737 10,517 819 30,032 43%
Aditya Birla Sun Life MF241,106 60,298 36,545 11,139 10,332 71,123 42%
ICICI Prudential Mutual Fund293,337 65,348 51,167 8,554 1,888 86,249 42%
SBI Mutual Fund205,391 64,394 25,698 12,814 2,958 52,840 35%
Reliance Nippon Life MF243,593 47,748 28,589 4,866 7,491 51,495 27%
UTI Mutual Fund153,364 23,975 8,239 3,878 5,244 18,859 14%
Total - Leaders Group1,805,185 442,776 272,995 74,596 48,836 508,507  
Challengers
Motilal Oswal Mutual Fund15,761 8,630 7,849 779 - 12,553 391%
Mirae Asset Mutual Fund13,467 7,124 6,244 303 583 9,961 284%
L&T Mutual Fund60,313 25,122 15,156 3,653 6,314 29,544 96%
JM Financial Mutual Fund16,633 3,111 4,614 -101 -1,402 6,119 58%
Sundaram Mutual Fund36,267 9,254 7,042 19 2,191 11,678 47%
IDFC Mutual Fund71,388 13,390 5,034 5,997 2,358 14,727 26%
Tata Mutual Fund48,906 10,635 2,862 1,209 6,564 8,784 22%
LIC NOMURA Mutual Fund22,114 4,092 493 -498 3,881 2,182 11%
DHFL Pramerica23,493 -1,314 839 -831 -1,308 -227 -1%
Invesco Mutual Fund24,122 505 1,191 -3,820 3,140 -464 -2%
Total - Challengers Group332,464 80,549 51,324 6,710 22,321 94,857  
Aspirers
Mahindra Mutual Fund 2,821 1,364 629 141 594 1,382 96%
IIFL Mutual Fund731 307 167 23 117 332 83%
BOI AXA Mutual Fund5,255 2,359 363 1,500 496 2,293 77%
PPFAS Mutual Fund924 248 249 - - 374 68%
Edelweiss Mutual Fund9,999 3,173 2,559 -529 1,231 3,925 65%
Principal Mutual Fund6,624 1,756 1,695 38 23 2,592 64%
IIFCL Mutual Fund (IDF)641 242 - 243 - 243 61%
Quantum Mutual Fund1,181 323 249 41 37 433 58%
Canara Robeco Mutual Fund12,256 2,845 2,276 975 -448 4,165 51%
Union Mutual Fund3,937 881 596 490 -204 1,282 48%
BNP Paribas Mutual Fund7,499 1,467 1,544 -353 276 2,101 39%
Essel Mutual Fund1,147 202 171 -58 88 243 27%
IDBI Mutual Fund10,653 2,892 1,054 -725 2,577 2,145 25%
Shriram Mutual Fund42 4 5 - - 8 22%
HSBC Mutual Fund11,251 2,581 431 -486 2,645 1,483 15%
IL&FS Mutual Fund (IDF)1,114 119 - 119 - 119 12%
Indiabulls Mutual Fund11,099 872 516 204 154 1,055 11%
Baroda Pioneer Mutual Fund11,084 299 691 46 -438 864 8%
Escorts Mutual Fund245 -41 8 -1 -47 -13 -5%
Taurus Mutual Fund597 -1,742 165 -237 -1,671 -825 -58%
Total Aspirers Group99,100 20,151 13,368 1,431 5,430 24,198  
Total Industry2,236,749 543,476 337,687 82,737 76,587 627,561

Some observations:

1. Among the Leaders, the 1st and 2nd positions interchange between Axis MF and DSP BlackRock, depending on which metric you consider to figure out who the champion is. Kotak MF comes in 3rd on both metrics.

2. A word about HDFC MF – they top the league tables on absolute growth in AuM on both parameters – aggregate numbers as well as weighted numbers – which is a great comeback from this champion, shrugging off the relatively slower growth of 2015 and 2016.

3. Among the Challengers, the top 3 growth champions remain the same – Motilal Oswal, Mirae Asset and L&T. Sundaram was the only other fund house in this group to grow faster than industry in 2017. 6 out of the 10 Challengers posted slower than industry growth in 2017 – not a very encouraging sign when you have built up scale and should be in a position to challenge the leaders.

4. Among the 20 fund houses that make up the Aspirers group, 9 grew faster than the industry average of 32%, 3 grew marginally slower than industry while 8 grew much slower than industry. The last set is perhaps where the biggest stress will be going forward, as Boards of some may begin getting restive with the businesses unable to make the most of favourable industry tail winds.

5. Since equity is what’s driving the markets and the industry, lets look at who the equity growth champions have been in 2017:

Fund HouseAAuMGrowth over Equity%age to totalCumulative
  Oct - Dec 171 yr AgoGrowthequity growthpercentage
  Rs. CrsRs. Crs.Rs.Crs.  
1HDFC Mutual Fund289,167 67,342 58,810 17.4%17.4%
2ICICI Prudential Mutual Fund293,337 65,348 51,167 15.2%32.6%
3Aditya Birla Sun Life MF241,106 60,298 36,545 10.8%43.4%
4Reliance Nippon Life MF243,593 47,748 28,589 8.5%51.9%
5SBI Mutual Fund205,391 64,394 25,698 7.6%59.5%
6Kotak Mahindra Mutual Fund119,799 37,664 21,294 6.3%65.8%
7DSP BlackRock Mutual Fund86,254 27,897 16,534 4.9%70.7%
8L&T Mutual Fund60,313 25,122 15,156 4.5%75.2%
9Axis Mutual Fund73,371 24,090 13,382 4.0%79.1%
10Franklin Templeton MF99,803 24,020 12,737 3.8%82.9%
11UTI Mutual Fund153,364 23,975 8,239 2.4%85.3%
12Motilal Oswal Mutual Fund15,761 8,630 7,849 2.3%87.7%
13Sundaram Mutual Fund36,267 9,254 7,042 2.1%89.7%
14Mirae Asset Mutual Fund13,467 7,124 6,244 1.8%91.6%
15IDFC Mutual Fund71,388 13,390 5,034 1.5%93.1%
16JM Financial Mutual Fund16,633 3,111 4,614 1.4%94.4%
17Tata Mutual Fund48,906 10,635 2,862 0.8%95.3%
18Edelweiss Mutual Fund9,999 3,173 2,559 0.8%96.1%
19Canara Robeco Mutual Fund12,256 2,845 2,2760.7%96.7%
20Principal Mutual Fund6,624 1,756 1,695 0.5%97.2%
21BNP Paribas Mutual Fund7,499 1,467 1,544 0.5%97.7%
22Invesco Mutual Fund24,122 505 1,191 0.4%98.0%
23IDBI Mutual Fund10,653 2,892 1,054 0.3%98.3%
24DHFL Pramerica23,493 -1,314 839 0.2%98.6%
25Baroda Pioneer Mutual Fund11,084 299 691 0.2%98.8%
26Mahindra Mutual Fund 2,821 1,364 629 0.2%99.0%
27Union Mutual Fund3,937 881 596 0.2%99.2%
28Indiabulls Mutual Fund11,099 872 516 0.2%99.3%
29LIC NOMURA Mutual Fund22,114 4,092 493 0.1%99.5%
30HSBC Mutual Fund11,251 2,581 431 0.1%99.6%
31BOI AXA Mutual Fund5,255 2,359 363 0.1%99.7%
32PPFAS Mutual Fund924 248 249 0.1%99.8%
33Quantum Mutual Fund1,181 323 249 0.1%99.8%
34Essel Mutual Fund1,147 202 171 0.1%99.9%
35IIFL Mutual Fund731 307 167 0.0%99.9%
36Taurus Mutual Fund597 -1,742 165 0.0%100.0%
37Escorts Mutual Fund245 -41 8 0.0%100.0%
38Shriram Mutual Fund42 4 5 0.0%100.0%
39IIFCL Mutual Fund (IDF)641 242 - 0.0%100.0%
40IL&FS Mutual Fund (IDF)1,114 119 - 0.0%100.0%
 Total Industry2,236,749 543,476 337,687 100.0%

The equity growth champion for 2017 is HDFC MF, followed by ICICI Prudential and Aditya Birla Sun Life. The green band signifies AMCs that account for 80% of equity growth – which is just 10 fund houses. The yellow band along with the green band cumulate to 95% of industry equity AuM growth – which is concentrated in 17 names. The next 23 fund houses collectively account for only 5% of equity AuM growth in 2017. If equity is likely to continue leading the way in this round of industry growth, this table tells us just who the growth champions of this cycle are likely to be and who are most likely to miss out on this big growth cycle that the industry is witnessing.

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