Mumbai: Fund size has always been synonymous with the popularity of a scheme. Typically, well performing funds tend to attract more investors. For example, HDFC Top 200 Fund launched in 1996 has posted an impressive 25.99% returns since inception and is managing Rs 9,069.73 crore as on September 2010. However a classification of more than 300 open ended equity schemes on the basis of AUM shows that 14 schemes having AUM of less than then Rs 1 crore have performed decently. IDFC Equity Fund launched in July 2009 has the smallest corpus of Rs 2.75 lakh and has posted one year return of 20.76%. For a variety of reasons such schemes are neglected by fund houses.
Tiny funds, sizeable returns
|
Scheme Name |
Total AUM (Cr.) (Sept 10) |
6 Months Returns |
1 Year Returns |
Since Inception Returns (%) |
|
Sahara Wealth Plus-Fixed Pricing |
0.75 |
14.11 |
25.76 |
16.03 |
|
IDFC Strategic Sector (50-50) Eq-B |
0.17 |
14.59 |
24.78 |
35.98 |
|
UTI SUNDER |
0.72 |
13.14 |
21.43 |
28.54 |
|
Edelweiss Nifty Enhancer-A |
0.12 |
12.70 |
21.14 |
22.39 |
|
Edelweiss Nifty Enhancer-B |
0.78 |
12.71 |
21.11 |
21.74 |
Break - up of open end equity schemes by size
|
AUM Range (in Rs crore) |
No. of Schemes |
Average Return (One year) |
|
0-1 |
14 |
19.50% |
|
1-10 |
59 |
18.06% |
|
10-50 |
88 |
18.98% |
|
50-100 |
49 |
20.76% |
|
100-500 |
86 |
19.89% |
|
500-1000 |
34 |
21.84% |
|
Above 1000 |
28 |
19.15% |
So what makes these schemes tiny? “Size begets size. The primary reason for their tiny size is that many of them failed to mobilize anything sizeable at the NFO stage and stayed that way. Even if the scheme puts up a decent performance, the small base makes it a deterrent for distributors,” said an industry expert.
IDFC Equity Fund -Plan B- Growth scheme collected just Rs 0.27 lakh in its NFO. Similarly Edelweiss Diversified Growth Equity Top 100 (E.D.G.E. Top 100) Fund -Plan C launched in May 2009 amassed net assets of Rs5.55 lakh in its NFO.
According to sources, some fund houses have simply let these schemes languish.
Fund officials are pointing to various reasons behind the size of such schemes. “Some fancy funds were launched at that time. Now they are no longer relevant. It may happen that the fund underperformed and investors exited the fund,” said a marketing head of a leading fund house.
One example of this is UTI’s Variable Investment Scheme (VIS) which was launched at the end of 2002. The scheme follows a pre-determined asset allocation exposure to BSE Sensex at various levels. In February 2009 it had a corpus of Rs 15.87 crore which fell to Rs 1.04 crore in September 2010.
Similarly, passive funds like UTI SUNDER and ICICI Prudential SPIcE Fund were launched in 2003. UTI Sunder managed a corpus of Rs 24.82 crore in April 2006 which has fallen to Rs 72 lakhs in September 2010.
Two ETFs, Edelweiss Nifty Enhancer and Shariah BeES, also feature among the 14 schemes which have less than Rs 1 crore AUM. The former has an AUM of Rs 12 lakh while the latter has Rs 93 lakh. “Distributors are not very keen on selling ETFs. These can only be bought if you have a demat account,” adds the above quoted source.
Cafemutual had reported on 22 December 2010 that many such schemes are set to get merged with schemes having larger AUM with similar objectives.
