LIC Mutual Fund, having missed the growth bus in the past three decades of operations, is on a catch-up bid and has set a target of crossing the Rs 1-lakh-crore-AUM-mark in the next five years.
The 43-player mutual fund industry has experienced exponential growth over the past few years in both the number of folios and Assets Under Management (AUM). According to the most recent Amfi data, the AUM increased 14% year over year in June 2022 to reach Rs 37.74 lakh crore, while the number of folios reached a record high of 13.55 crore.
Biggest player SBI Mutual Fund cemented its position with 23.7 per cent growth in AUM at Rs 6.47 lakh crore in the month under review, followed by ICICI Prudential MF at Rs 4.65 lakh crore, pushing the long-time market leader HDFC AMC to the third slot at Rs 4.15 lakh crore.
Aditya Birla Sun Life MF was pushed to fifth place by Kotak MF, which rose to the fourth spot with 2.82 lakh crore in AUM.
The top 10 firms out of the 43 handle up to Rs 33.4 lakh crore of the Rs 37.74 lakh crore total AUM of the industry as of June.
LIC Mutual Fund, while being a subsidiary of LIC—the biggest financial force in the country—was never considered in the AUM rankings throughout its 33+ years of operations, beginning with a joint venture with Nomura of Japan.
However, the current management is trying to change that and has set a five-year development strategy in which it aims to reach Rs 1 lakh crore in AUM by FY27.
"We've chalked out a five-year growth plan. We should be growing by 3.5-4x or at least take our AUM past the ₹1-lakh-crore-mark by FY27 from where we are now. To begin with, we expect to grow at least 70 per cent this fiscal to touch ₹30,000 crore AUM, aided by new fund launches and also partly aided by the forthcoming merger of the IDBI AMC with us," TS Ramakrishnan, managing director and chief executive, told PTI in an interview. The head honcho, however, admitted that growing the AUM 3.5x to 4x is a tall order.
He further said the five-year growth plan also involves taking the fund house public with a primary share sale after the fifth year or so. "But more needs to be done on this front as it is still on the drawing board only," he said.
Gains from the merging of IDBI mutual fund
The fund house anticipates rapid growth for the current fiscal year with the launch of three new funds, the first of which was announced last month. The fund house also expects to benefit from the merger of IDBI Mutual Fund, which is expected to be completed within the next three to four months, subject to regulatory approvals.
The optimism is built on the continued robust fund inflows, which should contribute to earnings of approximately 10,000 crore from new funds and another 3,000 crore from the merging of IDBI AMC, for which it has obtained all permissions with the exception of SEBI.
"IDBI AMC has 20 funds, of which 10 will be retained, while the rest will be merged with our existing schemes as Sebi does not allow multiple schemes in the same segment. The merger will also get us 3 lakh more retail customers, boosting our low retail base of 5.5 lakh now," Nityanand Prabhu, the executive director and business head, said.
New Schemes
LIC AMC, which has formerly been limited to fixed income schemes, has filed for three new debt equity and money market plans and currently has 26 schemes active.
Prabhu said, the current AUM of ₹17,500 crore is led by over ₹10,000 crore in debt funds, ₹5,000 crore in equity funds, which doubled in the past five years and constitutes almost 30 per cent of the total now; and ₹2,700 crore in exchange-traded funds, of which around ₹1,000 crore is in G-secs and state debt.
From the past few years the company has moved on well especially after entering the equity space, and hopes to make it bigger from the present around 30 per cent AUM share to 50 per cent over the next few years, he added.
(with inputs from PTI)
| Edited By: DNA Web Team |Source: DNA Web Desk |Updated: Aug 22, 2022, 03:33 PM IST
