During 2013, the performance of the mutual fund industry has, to an extent, mirrored the performance of the Indian economy, the stock markets and the FII investment flows.
This year, not a single new licence was issued and the sector has not witnessed any fresh foreign investment. On the contrary, 2013 was a year of consolidation for the industry.
HDFC MF, with assets of over Rs 1 lakh crore, agreed to buy all eight schemes of Morgan Stanley with combined assets of Rs 3,290 crore. Besides, Daiwa sold its assets to SBI Mutual Fund for an undisclosed amount this year.
For most part of the year, the bond funds had garnered a major share of incremental AUM. However, it is only in the last two months that have witnessed a significant rise in the AUM of the liquid category.
The data also suggests that the rise in the industry AUM is predominantly due to the flows into the liquid category on the back of higher than expected FCNR (Foreign Currency Non-resident) deposits mobilisation by banks and in the absence of a strong credit growth.
Inflows in income and liquid funds have contributed the most to the industry's rising AUM. With inflows of a staggering Rs 1.4 lakh crore, liquid funds AUM surged to Rs 2.46 lakh crore. A similar trend was seen in income funds, where inflows rose to around Rs 23,000 crore taking the assets managed by the fund to Rs 4.31 lakh crore.
However, investors continued to shy away from gold ETFs, with net outflows totalling Rs 1,659 crore. This takes the asset managed by the fund to Rs 9,325 crore. The category has seen outflows in nine out of the 11 months this year.
In August, gold ETF schemes had posted their highest monthly outflow in more than five years (Rs 588 crore) as the rupee's depreciation boosted domestic gold prices, prompting investors to book profits in these funds.
In terms of sectors, export oriented segments, IT and pharma stocks were in the limelight throughout the year on account of weak domestic currency and improving global growth. Besides, industry continues to be bullish on these sectors for the next year as well.
About the next year, HSBC Global Asset Management CEO Puneet Chaddha said: "We believe that 2014 should see more of the same as in 2013. Debt funds could continue to attract retail investors towards the first half of the year with some allocation to hybrid products like MIPs and Dynamic funds."
"Having said that, it could be a good year for equities as by the end of 2014 we would have a government that has been newly formed and the US taper could have become stale news (or 'digested' in market parlance)," he added.
Going forward, Sebi could adopt a more stricter approach towards 'non-serious' asset managers. An advisory committee formed to review the net worth requirement for Asset Management Companies has suggested an upward revision in the minimum networth required for an AMC, Mehra said.
