MUMBAI: SBI Mutual Fund has displaced HDFC Mutual Fund to become India’s largest fund house, according to quarterly average AUM data released by the Association of Mutual Funds of India (AMFI) for January-March.
SBI MF has attributed the growth to its network of independent financial advisors and relative emphasis on debt funds rather than inflows from the Employees Provident Fund Organisation (EPFO) or sales from SBI bank branches.
Industry average AUM grew to ₹27.02 trillion from ₹24.48 trillion during the reporting quarter. However, this figure is likely to be lower if one considers AUM at the end of March 2020 on account of the Covid-19 driven market correction.
The benchmark Nifty index fell around 27% in March.
According to the AMFI data, SBI Mutual Fund had assets of ₹3.73 trillion compared with ₹2.83 trillion in the same quarter of last year. This amounts to a growth of 32%, well above the growth recorded by HDFC Mutual Fund of 8%. The latter’s assets grew to ₹3.69 trillion from ₹3.42 trillion.
ICICI Mutual Fund saw a growth of 9.3% with its AUM growing from ₹3.2 trillion to ₹3.5 trillion but has now moved to third place from the second spot previous year.
DP Singh, executive director and chief marketing officer, SBI Mutual Fund, dismissed claims that the growth is due to flows into Exchange Traded Funds (ETFs) run by SBI, which get flows from the Employees Provident Fund Organisation. “Our average AUM has grown by about ₹89,000 crore over the past year despite the major market correction. Just 7,000-8,000 crore of AUM growth is in the ETF category," he said.
He also rejected arguments that much of the growth was propelled by SBI’s vast branch network. “In terms of sales channels, our largest sales channel is our network of Independent Financial Advisors (IFAs) followed by SBI bank branches.
"We have been largely unaffected by the credit crisis on the debt side, which has helped us in garnering higher share in the category," he added referring to the credit crisis that has raged in India after the implosion of the IL&FS group in September 2018.
SBI Mutual Fund had a small exposure to Reliance Home Finance, a Reliance ADAG Group company but was not significantly hit by other major defaults in the year gone by.
“The majority of our AUM growth has been on the debt side ( ₹49,000 crore) rather than equity. As far as SBI Channel is concerned, we believe that a customer's foray into mutual funds from bank deposits should begin with debt funds rather than a relatively higher risk product like equity. Even in equity category, our larger share of sales have been in the equity hybrid category," Singh added.
Other AMCs which have seen rapid growth in the year gone by include IDFC Mutual Fund which grew by 49.8% to hit ₹1.03 trillion average AUM and Mirae Asset Mutual Fund which grew by 78.6% to reach an AUM of ₹43,000 crore.