Mutual Funds bank on rural, non-metro areas to boost AUM

By Chirag Madia

The Mutual Fund (MF) industry has got a new window to offset the redemption pressure faced by it during October 2008. Riding on the mop-up, which has been coming from the non-metro and rural, several fund houses have witnessed a steady increase in their asset under management (AUM). They have registered over 50% growth between November 2008 and February 2009.

LIC MF, ICICI (ICICIBANK.NS : 345.35 -39.85) Prudential and UTI MF's AUM constantly increased after October 2008. Between November 2008 and February 2009, LIC gained over 100% in their AUM, while ICICI added 45% and UTI's AUM rose over 30%. Market players sense that despite the recession and uncertainty in the markets, rural India is their latest target and they have been steadily increasing their exposure in the tier-II and III cities.

Nimesh Shah, MD and CEO of ICICI Prudential Asset Management said, "In the past few months, we have increased our exposure in the tier-II and tier-III cities. Though the markets are facing some pressure, there is tremendous growth in the rural areas."

In November last year, ICICI Prudential's AUM was Rs 37,055.67 crore which has increased to Rs 53,514.07 crore or 44.42%. However LIC MF remained a top performer in the last four months as its AUM gained Rs 12,584.12 crore (107.70%) for February 2009 at Rs 24,268.42 crore, compared to Rs 11,684.30 crore in November last year. IDFC MF also added over Rs 4,913.22 crore or 56.57% in the past four months. Its AUM, which in November 2008 stood at Rs 8,685.71 crore, increased to Rs 13,598.93 crore.

"After the downturn in the markets, eight major cities that used to invest in the MF have decreased their exposure while there has been constant rise from the investors in non-metros in the country," added Shah.

While UTI MF is considerably increasing their branch openings throughout the country, in the past four months they have opened over 17 branches and are planning to open more 20 branches in the next few months. UTI MF's AUM for February 2009 stood at Rs 49,224.93 crore, up Rs 10,866.79 crore or 28.33%, compared to Rs 38,358.14 crore in November 2008.

Officials from UTI MF on condition of anonymity said, "Our target is to complete 150 branches and till date we are with 130 branches. We will be opening rest 20 branches in the next two-three months."

Sunday March 29, 01:40 AM Source: Indian Express Finance