Though it boasts of a distribution network of 120 branches across India, with 2.4 million customers, equity assets (which predominantly come from the retail base) still form a very small portion of overall assets. The retail component in the fixed-income basket is around 40%. Now the fund is working on increasing penetration across the country and brand-building.
Over the past 12 months, it has done well on the equity side. Exactly a year ago, of the 14 Birla Sun Life MF funds which boasted of five-star and four-star ratings, just one was an equity offeringBirla Sun Life Equity. This time, their list has five equity funds and two hybrids (a monthly income plan and an equity-oriented balanced fund).
This year, they have once again proved their merit.
This asset management company has witnessed some phenomenal growth in the past year. Its market share has actually gone up from 9.9% (August 2008) to 12.53% (August 2009). In the second half of 2008, HDFC Mutual Fund overtook ICICI Prudential Mutual Fund as the second largest fund house in the country in terms of assets under management.
When one looks at the composition of assets, its worth noting that the growth has come from money going into the liquid and liquid-plus segment. In September 2008, the fund house had 28% of its assets in equity and 39% in cash. A year later, the equity component has dropped to 21% while cash has zoomed to 70.32%.
Its liquid funds now have almost 30% of the assets in instruments with very high liquidity.
ICICI Prudential Infrastructure and ICICI Prudential Dynamic are its best offerings. ICICI Prudential Tax Plan was a category underperformer over the past few years but has been doing very well recently. Ditto for ICICI Prudential Discovery, whose performance has impressed this year.
Its first two equity funds, Reliance Vision and Reliance Growth, put it in the limelight in 2002 and 2003. Their performance was smartly leveraged, along with the Reliance brand, to gain investor attention. It worked and Reliance Mutual Fund became Indias largest private sector MF in 2006 and the largest fund the next year. The fund went on to create history by mopping up Rs2,700 crore for the new fund offering (NFO) of Reliance Equity Advantage NFO (2007) and Rs5,660 crore for Reliance Natural Resources Retail NFO (2008).
While some schemes may perform better than others, the fund has never really had a disaster with any of its offerings. A bone of contention has always been the huge size of the corpus.
Its best performing equity funds are UTI Infrastructure, UTI Opportunities and UTI Dividend Yield. The Transportation and Logistics Fund, which was the earlier auto sector fund, has been delivering fabulously this year. On the fixed income side, its best performers are UTI Money Market Mutual Fund and UTI Floating Rate ST Regular, and its debt-oriented hybrid fund.
UTI Mutual Fund has the largest investor base, a massive distribution network and is one of the most profitable fund companies in the country.
The MF industry seems to be on a recovery path after the losses in September. The industry registered an increase in assets as the money coming into funds increased substantially. Investors added to its coffers by as much as Rs1,41,291 crore, resulting in a percentage change, over September, of 22.50%. However, there is a flip side to this. Open-end income schemes and gold exchange-traded funds (ETFs) were the only two categories that registered inflows, while all other categories registered outflows. Open-end income schemes, which registered inflows of Rs1,49,957 crore, thus went up by 52.35%.
Arbitrage funds may just have made a comeback. At least that is the signal Kotak Asset Management Co. Ltd is sending by reopening the door to fresh investment in its arbitrage fund. The trend may well be set for their return as these funds thrive in a volatile stock market environmentthe higher the volatility, the higher the chance of mis-pricing of stocks in the spot and derivatives markets. This works especially in a bull market. Arbitrage funds stop fresh inflows if they see opportunities dwindling or if the fund size becomes too large, which prevents the fund manager from optimizing returns.
Fidelity MF has launched Fidelity India Value Fund, an open-end diversified equity fund. It will invest in Indian and international equities, with special emphasis on undervalued securities. It has been benchmarked to the BSE 200. The fund allocation will be 80-100% of net assets in equity, and up to 20% in cash, debt and domestic exchange-traded funds (ETFs). The fund may invest up to 10% in foreign securities, including overseas ETFs. The exit load applicable will be 1% if redeemed within one year, while the minimum amount for lumpsum investments is Rs5,000. The new fund offer (NFO) is open till 15 December.
ICICI Prudential to launch ICICI Prudential Oil Fund
ICICI Prudential MF has filed an offer document with Securities and Exchange Board of India (Sebi) to launch ICICI Prudential Oil Fund. It will be an open-end debt fund that will invest in oil-linked debentures created by investment banks, where these debentures will provide coupons (returns) linked to oil prices. It would be the first oil fund available to domestic investors. The aim of the fund manager would be to invest 80% of the total assets in oil-price-linked foreign debt securities. The fund can hold 20% of the debentures till maturity.
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