Mutual Fund Screener For the quarter ended Dec-17

Mutual Fund Screener For the quarter ended Dec-17

Mutual Fund Screener What s Inside 01 Industry Size 02 Investor Trends 03 Inflow Outflow Analysis 04 Sector Update 05 Category Performance 06 Industry Insights 07 AMFI Proposals 08 Regulatory Update

Section I INDUSTRY SIZE

QAAUM (In Rs. Crore) Industry QAAUM up 7% - crosses Rs. 22 lakh crore 2,400,000 1,800,000 Mutual Fund Industry (QAAUM) Dec-17, 2,236,717 Sep-17, 2,094,852 Dec-16, 1,693,339 Growth in QAAUM for the Quarter Ended Dec-17 AMCs Range Top 5 5% to 9% Next 10-4% to 14% Rest -7% to 26% Source: AMFI; ICRA Online Research Note: AMC list as of Dec-17 QAAUM 1,200,000 600,000 0 Dec-17 Sep-17 Dec-16 Source: AMFI, ICRA Online Research; Note: QAAUM Quarterly Average Assets Under Management Industry Quarterly Average Assets Under Management (QAAUM) grew for the 17 th consecutive quarter in Q3FY18 The 6.8% quarterly growth in industry assets was driven by sustained inflows in equity schemes through both lumpsum and Systematic Investment Plans (SIPs) and mark to market gains Rs. 141,865 crore added in Q3FY18 ICRA Online Limited 4

AUM (In Rs. Crore) QoQ Growth (In %) Top 10 AMCs account for ~81% of QAAUM 300,000 Top Ten AMCs 12% 250,000 200,000 9% 150,000 6% 100,000 50,000 3% 0 ICICI Prudential Mutual Fund HDFC Mutual Fund Source: AMFI, ICRA Online Research Reliance Mutual Fund Aditya Birla Sun Life Mutual Fund SBI Mutual Fund UTI Mutual Fund Kotak Mahindra Mutual Fund Dec-17 Sep-17 % Change QoQ Franklin Templeton Mutual Fund DSP BlackRock Mutual Fund Axis Mutual Fund ICRA Online Limited 5 0%

Kotak Mahindra Mutual Fund DSP BlackRock Mutual Fund Axis Mutual Fund L&T Mutual Fund Motilal Oswal Mutual Fund Mirae Asset Mutual Fund Edelweiss Mutual Fund BOI AXA Mutual Fund Mahindra Mutual Fund IIFL Mutual Fund AUM (In Rs. Crore) YoY Growth (In %) Smaller AMCs grow at a faster pace Top 10 Fastest Growing AMCs 100,000 Dec-17 Dec-16 125.00% 75,000 100.00% 50,000 25,000 0 75.00% 50.00% 25.00% 0.00% Among the larger AMCs (QAAUM > Rs. 35,000 crore), Kotak Mahindra, DSP BlackRock, Axis, and L&T Mutual Fund have shown exceptional growth in assets Source: AMFI, ICRA Online Research QAAUM of six fastest growing AMCs below Rs. 20,000 crore ICRA Online Limited 6

Private sector JVs (predominantly Indian) manage 55% of Q3FY18 QAAUM Bank Sponsored Category Joint Ventures - Predominantly Indian Joint Ventures - Predominantly Foreign As a % of Q3FY18 QAAUM Source: AMFI, ICRA Online Research Note: Represents change in contribution to total QAAUM from the year ago period Year 1 Q3FY18 vs. Q3FY17; Year 2 Q3FY17 vs. Q3FY16 QAAUM (In Rs. Crore) Growth Q3FY18 Q3FY17 Q3FY16 Year 1 Year 2 10.0% 222,784 153,304 109,921 45.32% 39.47% 0.5% 11,085 10,785 9,255 2.78% 16.53% Others 7.5% 167,956 140,206 116,369 19.79% 20.48% Institutions Indian 1.0% 22,756 18,421 12,727 23.53% 44.74% Private Sector Indian 17.8% 399,041 285,452 221,604 39.79% 28.81% Joint Ventures - Predominantly Indian 54.8% 1,226,832 934,105 716,624 31.34% 30.35% Foreign 6.5% 144,893 111,775 98,460 29.63% 13.52% Joint Ventures - Predominantly Foreign 0.8% 17,877 13,538 13,512 32.05% 0.19% Joint Ventures - Others 1.1% 23,493 24,807 2,163-5.30% 1046.65% ICRA Online Limited 7

Section II INVESTOR TRENDS ICRA Online Limited 8

Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Folio (In Lakhs) 537.8 543.9 554.0 561.4 571.9 582.3 594.2 608.5 620.5 631.7 649.2 664.9 1 Month Change (in lakhs) MF industry adds 44.4 lakh folios in Q3FY18 Category wise Folio Count (In Lakhs) Fund of funds investing Other ETFs 700.0 Folio growth in last 12 months 20 GOLD ETF Balanced Equity ELSS Income 660.0 620.0 580.0 540.0 15 10 5 Gilt Liquid/ Money Market Folio (in lakhs) 0.0 100.0 200.0 300.0 400.0 Dec-16 Sep-17 Dec-17 500.0 Folio 1 Month Change 0 Source: AMFI, ICRA Online Research Source: SEBI, ICRA Online Research As per data from SEBI, total folio count at the end of Dec-17 stood at 6.6 crore, 7.2% higher than the previous quarter The mutual fund industry added close to 44.4 lakh new folios in Q3FY18 out of which 35.1 lakh were in the Equity category (including ELSS) ICRA Online Limited 9

AUM (In Rs. Crore) B-15 locations generate 19% of industry assets in Dec-17 2,000,000 1,500,000 1,000,000 500,000 Growth in Assets in T-15/B-15 Locations 0 Dec-17, 1,840,442 Dec-17, 420,256 Dec-17 T15 B15 Dec-16, 1,420,525 Dec-16, 285,572 Dec-16 100% 75% 50% 25% 0% Equity/Non-equity Asset Mix in T-15/B-15 Locations 60% 40% 60% 40% 29% 71% 49% 51% T15 B15 T15 B15 Dec-17 Equity Non-equity Dec-16 AUM Garnered by Different Channels Source: AMFI, ICRA Online Research Dec-17 Dec-16 T-15 B-15 T-15 B-15 Associate Distributor 6% 16% 6% 13% Direct Plan 45% 20% 45% 25% Non-Associate Distributor 49% 64% 50% 62% The country s smaller towns or B15 (beyond top 15 cities) locations accounted for 18.6% of the total industry AUM at the end of Dec-17 In the last 12 months, B15 towns have witnessed AUM growth of 47.2% or Rs. 1.35 lakh crore to reach Rs. 4.20 lakh crore ICRA Online Limited 10

Individual investors form a bigger portion of industry assets; institutional category growing at a slightly slower rate 100% Individual and Institutional Investor Composition 80% 9.6 8.8 6.5 5.3 60% 40% 20% 11.7 7.7 6.3 5.3 Source: AMFI, ICRA Online Research; Note: Data used is month end AUM Individual investors include Retail and HNI Institutional investors include Corporates, Banks/FIs and FIIs 0% Dec-17 Dec-16 Dec-15 Dec-14 Individual Institutional AUM (In Rs. Lakh Crore) In the last four years, total assets attributable to individual and institutional investors grew at a CAGR of 30.5% and 22.2%, respectively ICRA Online Limited 11

Individual investors continue to favour equity funds; institutional investors prefer debt-oriented funds Individual Institutional 28% 20% Equity Funds Equity Funds 2% Balanced Funds Balanced Funds Others Liquid Funds 3% Others Liquid Funds 0% Debt Funds Debt Funds 0% 13% 56% 52% 26% Source: AMFI, ICRA Online Research Note: Data pertains to month end AUM of Dec-17 Equity Funds include ELSS and Other ETFs Debt Funds include gilt funds Others include other ETFs and Fund of funds investing overseas At the end of Dec-17, equity funds formed 56% of the total asset base of individual investors, while debt-oriented funds made up 78% of the portfolio of institutional investors of which liquid schemes constituted 26% ICRA Online Limited 12

Section III INFLOW OUTFLOW ANALYSIS

In Rs. Crore Investors pour over Rs. 50,000 crore in equity mutual funds in Q3FY18 Category-wise Net Inflow/Outflow Q3FY17 Q2FY18 Q3FY18 Fund Of Funds Investing Overseas Other ETFs Gold ETF 120,000 90,000 60,000 Industry-wide Net Inflow/Outflow 108,601 79,278 ELSS - Equity Gilt Liquid/Money Market Balanced Equity Infrastructure Debt Fund Income -70,000-35,000 0 35,000 70,000 In Rs. Crore 30,000 0 13,225 Q3FY18 Q2FY18 Q3FY17 Source: AMFI, ICRA Online Research Investors preferred Equities (including ELSS) and Balanced funds over Income and Liquid funds, which could be due to low yields on money market and fixed income securities Source: AMFI, ICRA Online Research ICRA Online Limited 14

In Rs. Crore Robust retail participation leads to high infusion in Equity funds 21,000 Equity Net Inflow/Outflow 15,000 9,000 3,000-3,000 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 Dec-17 Source: AMFI, ICRA Online Research Note: Equity includes ELSS funds Equity funds (including ELSS) saw net inflow of Rs. 52,397 crore in Q3FY18 vis-à-vis Rs. 52,025 crore in Q2FY18. Cumulative inflow into these funds surged 178% to Rs. 152,312 crore in CY17 from Rs. 54,875 crore in CY16 As per data from AMFI, SIP contribution for Q3FY18 stood at Rs. 17,736 crore as against Rs. 11,291 crore in Q3FY17, a growth of 57% from the year-ago period ICRA Online Limited 15

Section IV SECTOR UPDATE

Equity AUM (In Rs. Crore) MFs continue to bet on Banks with more than 20% exposure Equity Exposure of Top 5 AMCs in Top 5 Sectors (Dec-17) 40,000 30,000 20,000 10,000 0 Banks Finance Consumer Non Durables Software Auto ICICI Prudential Mutual Fund HDFC Mutual Fund Reliance Mutual Fund Aditya Birla Sun Life Mutual Fund SBI Mutual Fund Source: AMFI, ICRA Online Research Top five sectors constituted close to 48% of the total equity AUM Over the year, three out of the top five sectors witnessed more than 50% increase in exposure (Finance ~125%, Consumer Non Durables ~79% and Banks ~74%) ICRA Online Limited 17

Banks Finance Consumer Non Durables Construction Project Auto Power Petroleum Products Auto Ancillaries Non - Ferrous Metals Pharmaceuti cals In Rs. Crore YoY Change in % Banks and Finance sectors see highest increase in exposure* Sector-wise Exposure in Dec-17 vs. Dec-16 200,000 Dec-17 Dec-16 % change 383.9% 400.0% 150,000 300.0% 100,000 200.0% 50,000 0 74.1% 125.2% 79.4% 94.2% 50.0% 120.6% 66.2% 79.0% 100.0% 30.6% 0.0% Source: AMFI, ICRA Online Research Note: Only top-10 sectors considered *Increase in exposure is in absolute terms ICRA Online Limited 18

Section V CATEGORY PERFORMANCE

5.5 9.5 9.3 8.9 8.8 8.3 Returns (In %) 14.1 13.0 13.9 13.6 13.2 18.7 17.6 18.7 24.8 30.4 37.5 38.7 38.6 Equity-oriented mutual funds continue to find favour 40.00 30.00 20.00 10.00 0.00 Performance* of Equity-Oriented Mutual Fund Categories 1 Year 3 Year 5 Year 10 Year Key drivers: Benchmark indices at lifetime high - S&P BSE Sensex and Nifty 50 gained 28% and 29%, respectively in CY17. Implementation of GST Act Recapitalisation package for banks Upgrade of India s position in World Bank s Ease of doing business list Sovereign rating upgrade by Moody s Diversified Funds Global Funds Sector Funds ELSS Index Funds Source: ICRA Online Research Note: *Compounded annualized returns Data as of Dec-17 ICRA Online Limited 20

Returns (In %) 2.4 5.1 4.6 6.2 6.3 6.1 5.6 Returns (In %) 2.3 4.9 6.5 6.4 7.4 7.8 7.7 7.7 7.8 8.2 7.7 8.6 8.2 Short term and long term categories post subdued returns 9.00 Performance* of Short-Term Debt Oriented Categories 9.00 Performance* of Long-Term Debt Oriented Categories 6.00 6.00 3.00 3.00 0.00 3 Months 6 Months 1 Year 3 Years Liquid Funds Ultra Short-Term Funds Short-Term Funds 0.00 1 Year 3 Years 5 Years 10 Years Income Funds Gilt Funds Source: ICRA Online Research Note: *Compounded annualised returns for periods 1 year; Simple annualised returns for <1 year Data as of Dec-17 Key drivers: Government s announcement of hiking its fiscal year borrowing amount raised investors concern over overshooting of the deficit target Increase in domestic inflationary pressure restricted MPC from lowering interest rates Increase in global crude oil prices ICRA Online Limited 21

Section VI INDUSTRY INSIGHTS

In Rs. Crore Equity MF inflows continue to drive the domestic equity markets 150,000 140,033 FPI/FII & Mutual Fund Investment Trends in Equity Markets 110,540 105,927 100,000 50,000 79,723 40,281 65,041 52,977 54,912 11,622 0-50,000-22,678-20,925-14,171 FY13 FY14 FY15 FY16 FY17 FY18TD FPI/FII MF Source: ICRA Online Research ICRA Online Limited 23

In % Large Caps command the largest share of assets 100% Investment Across Market Caps* 80% 60% 40% 20% 0% Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Large Cap Mid Cap Small Cap Debt & Other Source: ICRA Online Research Note: *Classification of market cap as per MFI Explorer, only equity diversified funds were considered for analysis ICRA Online Limited 24

Bond/ Debenture Cash & Equivalents CD CP Gilt Others REITs & InvITs SDL T Bill 5.6% 4.4% 6.7% 6.2% 1.3% 1.9% 0.0% 0.9% 3.8% 2.7% 0.0% 5.3% 1.4% 6.8% 6.3% 5.4% 8.4% 4.6% 5.4% 3.7% 0.7% 0.6% 12.0% In % 70.9% 64.8% 70.4% Instrument allocation pattern in debt segment remains consistent 75% 50% 25% 0% Dec-17 Sep-17 Dec-16 Source: ICRA Online Research ICRA Online Limited 25

Average Maturity (In Years) Average maturity for Income and Gilt funds remains consistent 12 Average Maturity Trends in Income, Gilt Long-Term & Gilt Short-Term Funds 8 4 0 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Source: ICRA Online Research Note: Categorisation of Income and Gilt funds as per MFI Explorer Income Fund Gilt Long-Term Gilt Short-Term ICRA Online Limited 26

Section VII AMFI PROPOSALS

Budget Proposals from AMFI AMFI has shared 17 direct tax and 11 indirect tax proposals with Finance Ministry Direct Tax Proposals Indirect Tax Proposals Introduction of debt linked savings scheme (DLSS) Taxation on listed debt securities and debt mutual funds to be aligned Alignment of tax treatment of retirement/pension schemes of mutual funds and NPS Threshold limit in equity oriented MF schemes to be lowered to 50% from 65% More Proposals submitted by AMFI Transaction between head office and branch of AMC should not be treated as supply Eligibility of credit with respect to spill-over of expenses from mutual fund scheme to AMC Availability of input tax credit against exit load levied by mutual fund schemes More Source: AMFI ICRA Online Limited 28

Section VIII REGULATORY UPDATE

Regulator remains vigilant (1 of 2) SEBI provides scheme categorisations In an effort to end duplication of schemes, SEBI categorised MF schemes under five different heads - equity, debt, hybrid, solution-oriented and others. It also clarified on market capitalisation norms for equity funds, instruments allowed for investments for corporate bond fund and credit risk funds SEBI directs to adopt TRI to benchmark schemes SEBI directed mutual fund houses to adopt Total Return Index (TRI) to benchmark schemes as it is a more appropriate way to measure the performance of such financial products Source: SEBI SEBI lays out approach for selection of benchmark With the objective of enabling investors to compare the performance of a scheme vs an appropriate benchmark, SEBI decided that the selection of a benchmark for a mutual fund scheme shall be in alignment with the investment objective, asset allocation pattern and investment strategy of the scheme ICRA Online Limited 30

Regulator remains vigilant (2 of 2) SEBI caps cross-shareholding in mutual funds to 10% To avoid potential conflict of interest, SEBI capped the crossshareholding in mutual funds to 10%. Hence, a sponsor of a mutual fund, its associate and/or its group company and its AMC through the schemes, or otherwise collectively, may not be allowed to have 10% or more stake in AMCs / Trustee Companies of any other mutual funds SEBI lays out tenures of independent trustees, independent directors, auditors In order to strengthen the governance structure of mutual funds, SEBI put in place a framework for the tenure of independent trustees, independent directors as well as auditors Source: SEBI ICRA Online Limited 31

Contact Information Saugat Acharya +91 98209 74940 saugat.acharya@icraonline.com Atul Sharma +91 96191 12544 atul.sharma@icraonline.com Eshna Basu +91 96747 11671 eshna.basu@icraonline.com Disclaimer: All information contained herein is obtained by ICRA Online Limited ( ICRON ) from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided AS IS without warranty of any kind. ICRON adopts all necessary measures so that the information it uses is of sufficient quality and from sources ICRON considers to be reliable including, when appropriate, independent third-party sources. However, ICRON is not an auditor and cannot in every instance independently verify or validate information received in preparing this document. All information contained herein must be construed solely as statements of opinion, and ICRA Online Limited or its affiliates or group companies and its respective and any of its officers, directors, personnel and employees, disclaim liability to any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this document or its contents in any manner or for any contingency within or beyond the control of, ICRON or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information. Opinions expressed in the document are not the opinions of our holding company, ICRA Limited (ICRA), and should not be construed as any indication of credit rating or grading of ICRA for any instruments that have been issued or are to be issued by any entity. The recipient alone shall be fully responsible and/or are liable for any decision taken on the basis of this document and/or the information contained herein. Readers are requested to click here for ICRON disclaimer - http://www.icraonline.com/legal/standard-disclaimer.html