New funds rake in the moolah

The new entrants into the Indian mutual fund industry are making big strides through a plethora of new fund offerings and fixed income schemes as they grow their assets under management at a fast pace.

Fund house Lotus Asset Management Company, which was launched just a year ago, has seen its assets grow from Rs 6,385.86 crore (Rs 63.85 billion) to Rs 8,142.93 crore (Rs 81.42 billion) in October, a steep rise of 27.5 per cent.

It has filed documents for regulatory approval for AGILE fund, which will be a Quant-based fund that invests in a passive portfolio of stocks. The selection of stocks is purely on the basis of a mathematical model.

Some of the other new entrants in the Indian mutual fund industry are Quantum Mutual Fund, AIG and JP Morgan. Several players including Dawnay Day, Edelweiss, Goldman Sachs, Nikko-Ambit, Bharti AXA, Religare-Aegon have announced plans to enter the high-potential segment.

Analysts attribute this upsurge in AUM (assets under management) numbers to the huge amount of untapped retail base in India.

The Indian mutual fund industry has been growing at an average rate of 9-10 per cent and is expected to grow at a much faster pace in the coming years. It is estimated that there are only 3.2 million mutual fund investors in India, of which the retail investor base is less than 10 per cent.

Quantum Mutual Fund, the smallest player in the industry, also managed to clock a 16 per cent growth in October. The fund house's AUM has leapt from Rs 61.22 crore (Rs 612.2 million) in September to Rs 70.99 crore (Rs 709.9 million) in October. Its growth is significant considering the fact that it is the only fund house in the country to operate without a sales channel.

Devendra Nevgi, chief executive officer of Quantum Asset Management said, "Our strategy has been to focus on investor interest and no investor wants to pay an extra burden through distribution costs. We operate through direct route and that is why redemptions in our case are very low."

Growing Assets

• The Indian mutual fund industry has been growing at an average rate of 9-10 per cent and is expected to grow at a much faster pace in the coming years
• It is estimated that there are only 3.2 million mutual fund investors in India, of which the retail investor base is less than 10 per cent