WHY MUTUAL FUNDS CAN ALSO BE VOLATILE

In September, Canara Robeco Asset Management Co. Ltd (AMC), which manages the assets of Canara Robeco Mutual Fund, became the fifth prominent fund house to list on stock exchanges.

- BY HOWINDIALIVES.COM

ICICI Prudential AMC, the second-largest fund house by assets under management (AUM), could be the next. The business model of mutual funds is simple. The industry is regulated in terms of what it can charge customers-the management fee is usually a percentage of AUM. The higher the AUM, the greater the revenues. That's also why industry stocks fell this week when the regulator proposed an effective cut in this fee. The challenge before AMCs is to grow AUMS in a choppy market and amid intense competition among themselves and from alternative avenues.

MIXED SHOWING BESIDES

CANARA Robeco, the other four listed fund houses are HDFC Asset Management Co. Ltd, Aditya Birla Sun Life AMC Ltd, Nippon Life India Asset Management Ltd, and UTI Asset Management Co. Ltd. In the past year, two of them, HDFC and Nippon, have outperformed the Nifty Financial Services Index, while the other two have underperformed.

But this performance is split into two distinct periods. Between October 2024 and March 2025, all four stocks underperformed the benchmark. After March, they rallied amid a general rise in share prices. The AMC stocks gained 29-67% during this period, significantly higher than the rise of 17% in the Nifty Financial Services Index. While AMCs operate across both equity and debt, and a range of sub-categories within those two broad asset classes, their revenues are heavily affected by overall equity market conditions. Across 20 fund houses (both listed and unlisted), the median share of equity investments in mutual fund assets is around 60%.

VOLATILITY IN FLOWS