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Team work and consistency - that is what made the difference for the men in blue who won the World Cup recently. And it is these qualities which distinguish some of the top fund houses, despite market swings, redemption pressures and stiff competition. ET Intelligence Group's Bakul Chugan Tongia & Skandita Agrawal analyse the performance of the mutual fund industry over the last nine quarters
Some of the best performers among India's fund houses and the men in blue, who won the World Cup last month, have a few things in common ? consistency in performance over a sustained period and team effort. The best fund houses in the country have been the ones whose schemes have figured in the top rankings for long even during a difficult phase.
For the Indian mutual fund (MF) the going has been tough given the volatility in the financial markets and redemptions. Stiff competition from traditional investment products that offer guaranteed returns are also weighing heavy on the industry. The weak performance of several fund schemes has also dampened investor sentiment.
ET Quarterly MF Tracker analyses some of the schemes that reported a robust performance despite uncertainties in the financial markets and also schemes that were once performing well, but are now falling out of investor favour.
SIMPLY CONSISTENT
However, some fund houses have posted robust and consistent performance and managed to retain investor confidence.
HDFC Asset Management
Despite market swings, redemptions and investor anxiety, HDFC Asset Management has performed well. Assets under management (AUM) of the fund house have doubled in the past three years to 86,282 crore even as the industry AUM has grown by barely 32%. While HDFC did face a testing time in 2007, when most of its schemes underperformed peers, it bounced back in the very next year. The years that followed have also been very good. The astute management skills of fund manager, Prashant Jain, have helped HDFC top the Platinum rankings in the ET Quarterly MF Tracker, and also to boost fresh investments for its schemes.
Reliance Asset Management
It is India's largest mutual fund house in terms of assets under management. The fund house was the first to edge out UTI from the pole position in terms of total assets. Reliance Asset Management has shown a consistent performance for over five years now. While the fund house came under attack for taking huge cash calls during the financial crisis of 2008, the strategy helped in terms of its assets not eroding substantially during the meltdown. After a brief inconsistent performance last quarter, the fund house seems to be gaining momentum once again.
IDFC Asset Management
With an average AUM of just over 21,000 crore, IDFC does not even feature in the top 10 fund houses by size. It has, however, made a mark on the basis of sheer performance on both the equity and debt fronts. Under the guidance of Kenneth Andrade, IDFC stands out especially in the category of mid and small-cap funds. Its schemes have done well both during a rally and also during a downturn.
Two other fund houses that need a special mention for their consistent performance are DSP Blackrock and Birla Sun Life Asset Management.
While DSP Blackrock's Equity, Top 100 and Small and Midcap equity schemes have figured in the list of the most consistent performers for the quarter together, Birla Sun Life's Frontline Equity, Dividend Yield Plus and Midcap Equity schemes have boosted the fund house's credentials.
FADING OUT?
Indian fund houses have come under pressure due to lack of performance. Here are some of the fund houses that were once popular with investors but whose performance has weakened over a period.
SBI Magnum Asset Management
SBI Magnum has long enjoyed the trust of investors; especially with its flagship schemes ? Tax Gain and Contra. These schemes command the highest AUM in the tax-saving and diversified equity categories, respectively, within the SBI bandwagon. Once a robust performer, SBI Magnum is struggling hard with the performances of its schemes today. Its popular schemes such as Multiplier Plus, Emerging Businesses, COMMA and even Contra and Tax Gain have been downgraded in ratings over a period of time. There is an urgent need for the fund house to gear up and regain the glory it enjoyed under its erstwhile managers Sandip Sabharwal and then Sanjay Sinha.
HSBC Asset Management
Once a popular fund house, HSBC Asset Management has been losing out on all fronts for quite some time. Not only has its flagship scheme Equity has gone down in ratings considerably, the fund house is also struggling with its other schemes such as Midcap Equity, Dynamic, India Opportunities and Progressive Themes. However, its Tax Saver Equity scheme has put up a relatively better performance. The fund house has forayed into the international market with the launch of a Brazil fund.
BUDDIES IN THE LIMELIGHT
They were little known among the investor community until a few quarters ago. Today, however, their products are in demand considering their good show.
Canara Robeco Asset Management
Despite being a part of the MF industry for almost two decades, Canara Robeco came to the limelight only after partnering with the Robeco Group in 2007. Its schemes such as Tax Saver, Equity Diversified and Balanced have been topping the charts consistently for nearly nine quarters, and the fund house has been recognised for its debt schemes as well. All this happened under the management of Anand Shah, who took over as the head of equities in 2008. However, with Shah's exit from the fund house a few months ago, anxious investors will be scanning its performance.
Fidelity Asset Management
Fidelity enjoys an international parentage and entered the Indian markets in 2004. Its schemes such as Tax Advantage, Equity and India Growth, are some of the best performers. With an asset base of about 9,300 crore, it is reckoned as one of the fastest growing new fund houses in the country.
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