Private Mutual Funds: 15 and going strong
July '07 marks the beginning of 15th year of private fund operations in India. And they already own 80% of top rated funds, as per ET's latest MF Tracker.
By Muthukumar K & Bakul Chugan, TNN |
Sensex turns 20K, then 18K to God knows where from there. Wish the same could be done with ages – adding and subtracting years to one’s convenience. As we write this copy, private players enter their 15th year of operations.
And thankfully this milestone can’t be taken away from them. It was in July ’93 that the erstwhile Kothari Pioneer (now merged with Franklin Templeton) got the first licence to set up mutual fund operations in the country.
Today private players dominate with a combined market share of 82% in terms of percentage of assets owned. The private funds put together own Rs 4,00,000 crore worth of assets. It has moved from a market share of little under 10% in ’99, when it owned only Rs 7000 crore of assets. The rise and rise of private funds has been backed by solid performance.
In the latest ET MF Tracker Sep ’07, 15 of the 20 Platinum rated schemes - highest rating given to any scheme – were from the private sector. (To assign ratings, ET uses the Sortino ratio – a superior risk adjusted return measure for comparing performance. Lipper provided the data for the study). Even among the public sector funds, it was SBI, which bagged all the accolades (four platinum ratings). The phase of 1987-93 marked the entry of public sector funds with SBI, Canbank, Bank of Baroda and LIC starting their asset management business. But post privatisation in ‘93, private players have managed to beat the rest in the performance game. In the recent ET ratings, in all 39 funds made it to the ‘Gold’ category, out of which 33 were from the private sector.
Who leads the overall medals tally in the recent ratings? SBI MF topped the charts with four platinum ratings, while Tata and ICICI Prudential got three each. Tata managed to get two extra platinum ratings. DSP ML added one, while HDFC and ICICI Pru lost two and one platinum respectively. The new kid on the block ABN AMRO MF entered with panache getting itself one Platinum, one Gold and one Silver. It takes a minimum performance track record of three years for a scheme to get rated and three of its schemes got rated for the first time.
The platinum rated funds include DSP ML Equity and SBI Contra (equity diversified), SBI Magnum Tax gain and Principal Tax Savings Fund (Equity Linked Saving Scheme). SBI Magnum balanced (Balanced), DSPML Savings Plus Aggressive (MIP) and ICICI Pru Long term, Tata pure equity, Tata Balanced and DSPML Savings were the new platinum rated funds while funds like HDFC Prudence and PruICICI Dynamic lost their platinum edge.
And thankfully this milestone can’t be taken away from them. It was in July ’93 that the erstwhile Kothari Pioneer (now merged with Franklin Templeton) got the first licence to set up mutual fund operations in the country.
Today private players dominate with a combined market share of 82% in terms of percentage of assets owned. The private funds put together own Rs 4,00,000 crore worth of assets. It has moved from a market share of little under 10% in ’99, when it owned only Rs 7000 crore of assets. The rise and rise of private funds has been backed by solid performance.
In the latest ET MF Tracker Sep ’07, 15 of the 20 Platinum rated schemes - highest rating given to any scheme – were from the private sector. (To assign ratings, ET uses the Sortino ratio – a superior risk adjusted return measure for comparing performance. Lipper provided the data for the study). Even among the public sector funds, it was SBI, which bagged all the accolades (four platinum ratings). The phase of 1987-93 marked the entry of public sector funds with SBI, Canbank, Bank of Baroda and LIC starting their asset management business. But post privatisation in ‘93, private players have managed to beat the rest in the performance game. In the recent ET ratings, in all 39 funds made it to the ‘Gold’ category, out of which 33 were from the private sector.
Who leads the overall medals tally in the recent ratings? SBI MF topped the charts with four platinum ratings, while Tata and ICICI Prudential got three each. Tata managed to get two extra platinum ratings. DSP ML added one, while HDFC and ICICI Pru lost two and one platinum respectively. The new kid on the block ABN AMRO MF entered with panache getting itself one Platinum, one Gold and one Silver. It takes a minimum performance track record of three years for a scheme to get rated and three of its schemes got rated for the first time.
The platinum rated funds include DSP ML Equity and SBI Contra (equity diversified), SBI Magnum Tax gain and Principal Tax Savings Fund (Equity Linked Saving Scheme). SBI Magnum balanced (Balanced), DSPML Savings Plus Aggressive (MIP) and ICICI Pru Long term, Tata pure equity, Tata Balanced and DSPML Savings were the new platinum rated funds while funds like HDFC Prudence and PruICICI Dynamic lost their platinum edge.
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We have rated around 200 schemes. Investor could use these ratings to facilitate their investment making process. So check whether the scheme under question is highly rated – that is Platinum or Gold. It indicates good performance and reasons for you to stay invested with the fund. Any slippage in ratings should be taken as a warning signal and rating below Silver as a sign to exit the fund.
There are practical problems in rating funds – thanks to job hopping fund managers. Take for instance, the newly rated ABN AMRO Equity fund. While it got a platinum rating, its fund manager Prateek Agarwal quit three months back. What does investors do under such circumstances? Many of the top performing equity schemes are from SBI and the equity team is relatively new. In such cases, the credit of top ratings can’t be entirely given to the new fund managers. While there are no easy answers, a better approach would be to concentrate on any slippage in ratings. (Get the entire ratings on the website http://www.etintelligence.com along with other analytical data for free download. You could register freely to access this data.)
There are practical problems in rating funds – thanks to job hopping fund managers. Take for instance, the newly rated ABN AMRO Equity fund. While it got a platinum rating, its fund manager Prateek Agarwal quit three months back. What does investors do under such circumstances? Many of the top performing equity schemes are from SBI and the equity team is relatively new. In such cases, the credit of top ratings can’t be entirely given to the new fund managers. While there are no easy answers, a better approach would be to concentrate on any slippage in ratings. (Get the entire ratings on the website http://www.etintelligence.com along with other analytical data for free download. You could register freely to access this data.)
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Its been more than three years since we have been rating schemes using risk adjusted return measure. Over the years we have improved the methodology to keep up with times. Our aim always being to facilitate proper choice-making for investors. And with 71% of equity funds outperforming (over five year period) the returns of Sensex, it seems our efforts haven’t gone a waste. Actively managed funds are still relevant and so are our ratings.
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