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India's mutual fund industry: a statistical profile

Monday's announcement that India's largest mutual fund, UTI, suspended redemptions from its largest fund for the remainder of 2001 has attracted keen attention to the influence of mutual funds in Indian capital markets.

To help investors put into perspective the problems at India's largest mutual fund, the state-run Unit Trust of India, Reuters has prepared the following statistical profile of the industry.

A separate fact-box providing vital statistical information about UTI can be viewed by clicking here.

The numbers mentioned in the following fact-box are taken from the industry's Web site - www.amfiindia.com.

Make-up of the industry

• The Indian mutual fund industry managed assets worth Rs 967.95 billion as of May 31.
• There are currently 36 asset management companies operating in India.
• Nine AMCs are majority owned by state-run banks or institutions. That nine includes the Unit Trust of India, which is the single-largest investor in the Indian markets with assets of Rs 576.84 billion under management.
• There are 13 AMCs majority owned by foreign or global investment houses, 10 privately run domestic asset management companies and four domestic/foreign joint ventures.

Funds by type

• In all, investors have a choice of 397 funds to choose from covering the gamut of financial offerings. Types include income, growth, balanced, liquid or money market, gilt and equity linked tax savings schemes.
• Income funds constitute the largest category with assets under management of Rs 523 billion or 54 per cent. Balanced schemes account for Rs 195 billion or 20 per cent, and growth funds Rs 138 billion or 14 per cent.
• Liquid or money market funds account for 6 per cent or Rs 60 billion; gilt funds have AUM of Rs 29 billion or 3 per cent and equity-linked tax savings funds account for Rs 23 billion or 2.4 per cent of the industry's assets.
• Some Rs 642.6 billion or 66.4 per cent of the industry's assets are managed by open-ended funds; Rs 133.3 billion or 13.8 per cent by closed-end funds, or funds which will terminate at a particular date; and Rs 192 billion or 19.8 per cent is invested through schemes with assured returns.

Mutual fund history

• Between 1964 and 1987, the industry was a 'one-man show', with UTI being the only player in the market.
• In the following six years, the industry was opened up but limited to state-run players. Six state-run banks and two government insurance firms established asset management companies.
• The industry remained a public-sector preserve till 1993, when the first private mutual fund - the Kothari Pioneer Mutual Fund -- launched one closed- and one open-ended fund.
• Nevertheless, about two-thirds of the industry's assets are managed by state-run AMCs and the remainder by privately run asset management companies.
• UTI alone controls about 60 per cent of the industry's assets; 17.6 per cent is managed by AMCs that are largely foreign owned and 10.4 per cent by Indian-owned AMCs.
• Indian private mutual funds have 4.9 per cent of the industry's AUM; state-run institutions control 3.8 per cent and bank-sponsored AMCs have a 3.6 per cent share of the pie.

Performance data

• The industry's equity assets are divided among diversified, tax planning, balanced, technology, pharmaceutical, consumer non-durable and specialty funds.
• Pharmaceutical funds provided a negative 4.65 per cent return for the past year to May. The other six categories posted double-digit percentage losses over the same time span, data collected by fund tracking firm Value Research showed.
• By comparison the 30-issue Sensex declined 18 per cent in the year to May.
• Technology funds have been the worst performers, plunging 45.41 per cent -- against a 35.59 per cent drop by the Bombay Stock Exchange's infotech index.
• The average return of diversified equity funds was -20.69 per cent for the past year to May. Tax planning schemes on average lost 23.08 per cent.
• Funds investing in the consumer non-durable sector posted an average return of -14.16 per cent, slightly better than the 16.50 per cent fall in the BSE's sectoral index.
• Average returns for specialty funds were -10.96 per cent and the balanced fund category posted a return of -9.84 per cent against the 0.41 per cent decline in its benchmark, the Value Research balanced index.
• Debt funds have been a far better source of income in the past year to May posting average returns between 9.23 and 14.61 per cent.

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