AI100: Swift Indian fund growth driven by SIPs
Two Indian firms vaulted this year into AsianInvestor’s list of the 10 fastest growing fund houses in the region by assets under management (AUM), according to our latest AI100 ranking, with their expansion driven by systematic investment plans, which are popular vehicles in the country.
The annual list ranks the 100 biggest global, Japanese and Asia ex-Japan fund houses by AUM for the 12 months ending September 2017.
Among the 10 fastest growing firms were Aditya Birla Sun Life Asset Management (ABSL AM) and SBI Funds Management (SBI FM), whose AUM increased by 36.7% and 37.7% respectively to $34.1 billion (for each fund house) over the reference period. (see chart below). They ranked sixth and fifth in this list respectively.
Meanwhile, Chinese firms continued to dominate the list of fastest growers, taking the top three spots, and six overall in the top 10, and recording huge increases in AUM; look out for analysis on this next week.
| Name | AUM 2017 ($b) | AUM 2016 ($b) | % change |
| HuaAn Fund Management | 46.9 | 23.8 | 96.98% |
| Tianhong Asset Management | 282.5 | 156.7 | 80.32% |
| Penghua Fund Management | 54.9 | 36.1 | 52.12% |
| Axa Investment Managers | 100.9 | 67.1 | 50.41% |
| SBI Funds Management | 34.1 | 24.8 | 37.74% |
In the overall AI100 list, SBI came in at number 75, up five spots from the previous year, and ABSL AM was 76th, rising six places.
For ABSL AM, asset growth in 2017 was driven by demand for its equity schemes and balanced schemes, A. Balasubramanian, chief executive at ABSL AM told AsianInvestor. The firm has seven equity schemes with more than $1 billion, up from three schemes a few years ago, he added.
ABSL AM has also focused on building long-term equity assets through systematic investment plans (SIPs), which allow investors to invest small amounts at regular intervals (weekly/monthly/quarterly), said Balasubramanian. These now account for close to 50% of monthly inflows in equity mutual funds, he noted.
These developments follow a strategic decision the fund house made five years ago by ABSL to seek to boost market share in equity funds from 5% to 11%. Currently ABSL AM’s market share in equity funds stands at 9.3% – no mean feat in a crowded market that boasts 40-plus mutual fund firms for a $325 billion market (which grew 15% in the year to March 31).
Likewise, SBI FM, a joint venture between the State Bank of India, India’s largest public-sector bank, and French asset manager Amundi, can attribute its strong growth in assets to demand for SIPs.
“[Such products create] a large pool of committed investors for the long term and the numbers seem set to grow,” chief marketing officer Srinivas Jain told AsianInvestor.
SBI FM is one of the largest fund houses in the country, with close to two-thirds of its business coming from institutional clients (64%) and the rest from retail (36%).
SIP SUCCESS
SIPs have powered a surge in assets for India's mutual fund industry, with the total amount collected by such schemes jumping 53% to Rs671.9 billion ($10.2 billion) in the 12 months to March 31, 2018.
According to the Association of Mutual Funds of India, on average about 97 millon SIP accounts were opened each month in the financial year ending March 31, up from 62 million accounts the year before.
SIPs have attracted affluent clients as well as mass-retail investors, according to wealth managers.
“It has also become a mode of investment for many high-net-worth individuals (HNWIs),” a family office founder based in Bangalore said on condition of anonymity. “HNWIs are increasingly vieweing equities as the only way to generate long-term returns.”
Overall four Indian asset managers made the AI100 list – the other two fund managers were Reliance Nippon Life Asset Management, which came in 49th, and UTI Mutual Fund, at 92nd.