LIC MF loses over half of assets in first half

At a time Life Insurance Corporation (LIC) is under the scanner due to the alleged bribe-for-loan scam at its housing finance arm, the mutual fund company of the corporation has been continuously losing business. Its assets have dipped substantially this year.

As the mutual fund industry faces redemption pressure, LIC Mutual Fund, a state-owned fund house, has performed worse than the industry so far in the current financial year.

The assets under management of LIC MF have plunged more than half in the first half of the year. While the industry lost only 4.5 per cent its assets, LIC MF's assets fell 53.37 per cent to Rs 19,726.96 crore as on September 30 compared with Rs 42,303.96 crore at the beginning of the financial year.

A majority of the outflow was from its debt funds, especially liquid and liquid plus schemes. "There is no worth mentioning scheme of the fund house. Moreover, on the performance side (net asset value, or, NAV), the schemes have performed average," said an independent industry expert.

The fund house has 26 schemes. Out of these, 11 are equity schemes, 10 debt while the rest are hybrid schemes.

According to data from Value Research, a mutual fund tracker, the debt assets dipped over 56 per cent to 16,911.18 crore, from Rs 38,990.77 crore at the beginning of the year.

In equity, the fall was 7.7 per cent to Rs 1,189.04 crore from Rs 1,287.65 crore. Only the hybrid segment saw a rise on assets, which rose 18.7 per cent to Rs 458.56 crore from Rs 386.31 crore.

Sushobhan Sarker, the former chief executive officer of LIC MF, admitted at a recent meeting that compared with other fund houses, LIC MF could not perform well.

We had not been aggressive and that's why we could not scale up the business, had told Business Standard. Sarker, who has now been given the international operation, has been replaced by N Mohan Raj.

A Mumbai-based mutual fund distributor said, "At a time money was flowing into fixed maturity plans and monthly income plans (MIPs), LIC failed to come up with such products. Moreover, there is no FMP, no good debt product that can be marketed well."

A bird's eye view of the NAVs of the schemes gives an idea of the average performance of the fund house, barring a few schemes.

In a market in which Sensex gave a return of close to 20 per cent when it was close to its peaks earlier this month, the return on the LICMF Index Sensex and the LICMF Index Nifty was below 10 per cent as on November 26.