Top fund houses rely heavily on their top distributors to grow business.
A Crisil report published by Aditya Birla Sun Life MF in its draft red herring with SEBI shows that the top 20 distributors of top six fund houses by assets have contributed 65% to the total AUM under regular plan.
These distributors account for Rs.4.16 lakh crore of the total assets of Rs.6.87 lakh crore under regular plan of top six fund houses.
However, the contribution of top distributors in the total assets under regular plans has declined a bit in the last few years. From 67% in FY 2016, such a contribution has come down to 65% in FY 2020.
The biggest fund house SBI MF is much ahead of the others in terms of contribution from top 20 distributors. The top 20 distributors have massive share of 82% of the total AUM under regular plan. The next five fund houses derive 54-64% of their total AUM under regular plan from top 20 distributors.
AUM sourced from top distributors as of March 31, 2020:
The reason behind SBI MF's comparatively higher figure is contribution of SBI Bank, the associate distributor of the fund house. The massive reach of the bank helped the fund house take SBI MF's products to every corner of the country. The bank has 61% share (Rs.79,100 crore) in the distributor AUM of SBI MF. No other top fund house has more than 20% business coming from a single distributor.
Overall contribution from different sets of top distributors (top 6 MFs):
|
FY20 Aum (%) |
FY16 Aum (%) |
Change in % points |
|
|
Top distributor |
25 |
17 |
8 |
|
Top 5 distributors |
43 |
40 |
3 |
|
Top 10 distributors |
53 |
53 |
0 |
|
Top 20 distributors |
65 |
67 |
-2 |
A tale of two MFs
Interestingly, the top two mutual funds — SBI MF and HDFC MF — showed opposite trends with regards to dependence on top distributors.
SBI MF has registered a significant increase in AUM share of top distributors between March 2016 and March 2020. Its no. 1 distributor SBI's share rose to 61% from 34% in four years. The contribution of top 20 in distributor AUM has also increased from 70% to 82%.
On the other hand, HDFC MF saw a marked decrease in contribution from top distributors. While share of top distributor (HDFC) declined from 28% to 18%, the contribution of top 20 distributors declined to 61% from 90%.
The rest four fund houses didn’t see much change in top distributors' share in AUM.
Comparison of top distributor AUM of SBI MF and HDFC MF:
|
SBI MF |
HDFC MF |
|||
|
Distributors |
AUM as on March-end 2016 (%) |
AUM as on March-end 2020 (%) |
AUM as on March-end 2016 (%) |
AUM as on March-end 2020 (%) |
|
No. 1 |
34 |
61 |
28 |
18 |
|
Top 5 |
49 |
72 |
59 |
38 |
|
Top 10 |
59 |
77 |
77 |
50 |
|
Top 20 |
70 |
82 |
90 |
61 |
