HDFC Securities in a recent report observed that amongst the bank backed fund houses Axis MF (47.6%) has highest reliance on its associate bank followed by SBI MF (35.2%). Meanwhile, Kotak MF (8.8%) has the least dependence on its associate bank amongst the top nine fund houses.
In absolute terms, SBI brought in flows of close to Rs. 90,000 crore for SBI MF. In the second place comes ICICI MF where ICICI Bank contributed around Rs. 56,000 crore in AUM.
What this means is that bank sponsors continue to drive substantial inflows for their associate fund houses. This is not surprising because with their large branch network banks can reach a wider retail consumer base. Consequently, MFs with associate banks tend to fetch higher premium in MF space.
Moreover, in the last few years, third party cross-selling that is selling other financial products like insurance and mutual funds has become a lucrative income stream for banks.
In terms of inflows from non-associate AUM, UTI MF (90.6%) ranks at the top spot followed by Franklin MF (81.5%) as these fund houses do not have any bank promoter.
Madhukar Ladha, Analyst, HDFC Securities has authored this report
