Mutual Funds witness rise in investments by group companies

Leading fund houses have seen a considerable increase in investments in their schemes by group companies in the first two months of the current fiscal.

Largest fund house, HDFC Mutual Fund, witnessed 17% rise in investment in its schemes to Rs 6,462 crore (Rs 64.62 billion) by group companies during May.

HDFC Mutual Fund was followed by ICICI Prudential MF (16%) and Birla Sun Life MF (13%) and Reliance MF (12%).

However, UTI MF saw a drop of two% in investment in its schemes to Rs 3,069 crore (Rs 30.69 billion) by related companies during the period.

Moreover, in April, top five fund houses saw an increase in investments in the range of 13% and 60%.

In absolute terms, Birla Sun Life MF saw an investment of Rs 8,072 crore (Rs 80.72 billion) from its related entities in May, ICICI MF (Rs 5,749 crore or Rs 57.49 billion) and Reliance MF (Rs 4,118 crore or Rs 41.18 billion).

Overall, Birla Sun Life MF has over 8% of its Assets Under Management from investments by group firms followed by HDFC MF (5%), ICICI Prudential MF (4.8%) UTI MF (3.8%) and Reliance MF (3.7%).

The fund houses have been disclosing the exact amount of investments by their group companies in their respective schemes following the Sebi directive.

As per Sebi's direction, MFs are required to make monthly disclosure of AUM from different categories of schemes, AUM from places beyond top-15 cities, contribution of sponsor and its associates in AUM and contribution from different types of investors (retail, corporate etc).

The fund houses also need to make disclosures about state-wise contribution and AUM from sponsor group or non-sponsor group distributors on their websites and share the same with AMFI within seven working days from end of the month.

These rules came into effect from this month.

The norms were recently framed by the market regulator as part of its first-ever long-term policy for the mutual fund industry.

Illustration: Uttam Ghosh/Rediff.com