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HDFC AMC share of equity AUM on a slow upward crawl

In the previous financial year, the asset manager’s overall market share had slumped from 12.6 percent in March 2021 to 10.8 percent in March 2022

Mumbai / September 15, 2022 / 02:08 PM IST

HDFC Asset Management’s battle to regain market share in equity assets of the mutual fund industry has slowly started bearing fruits for the company.

Helped by an improvement in the performance of many of its equity mutual fund schemes, the asset manager’s market share in the industry equity assets has improved to 9.58 percent in August from a low of 9.37 percent in April, data compiled by Prime Database showed.

In the previous financial year, the asset manager’s overall market share had slumped from 12.6 percent in March 2021 to 10.8 percent in March 2022 as investors continued to prefer other AMCs amid a roaring bull market in high growth stocks.

“I think we are seeing the market share is stabilising with a fall in the market share in redemption and an increase in the market share in gross flows,” Chief Executive Officer Navneet Munot had told analysts in a post-earnings call in July.

HDFC AMC’s investment style of deep value, led by its former Chief Investment Officer Prashant Jain, had underperformed in 2021 bull phase in Indian stocks. However, with value stocks now back in vogue, the asset manager has seen a revival in interest from investors.

The Nifty500 Value 50 index has gained 10 percent so far in 2022 as against near 4 percent gains for the Nifty 50 index. “HDFC AMC has stuck to time-tested investing style, which is now again reaping superior outcomes,” brokerage firm YES Securities said in a recent note.

For reference, the AMC’s flagship HDFC Flexicap Fund has given 18.7 percent returns in the past year as compared to 7 percent returns in the BSE500 Total Return index.

Munot is of the view that the improvement in fund performance and its impact on market share is reflected with a lag of couple of quarters. With many of its actively managed equity schemes doing well, the former SBI Mutual Fund CIO sees scope for improvement.

“Investors and distributors will then start planning an action, but the real action would follow over the next couple of quarters. So, it takes time for one to start seeing results of good performance,” Munot said.

The task ahead for HDFC AMC will be to build on the improvement in fund performance to win back market share in systematic investment plans (SIP). The company has acknowledged that it has lost significant ground to rivals on SIPs where it once used to be market leader.

Munot alluded to a change in digital marketing strategy, improving user experience during SIP journey and better performance as catalyst for likely revival in the asset manager’s performance in the SIP segment.

“We are very hopeful over the next couple of quarters, couple of years. We would look to regain that market share in SIP,” Munot said.

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Chiranjivi Chakraborty
first published: Sep 15, 2022 02:08 pm