MF industry saw its net profits plunge by 50 percent in the financial year 2010-11 as industry expenditure surged 20 percent and equity inflow declined 41 percent.
In the financial year 2010-11, the MF industry saw its net profits plunge by 50 percent even though the revenues declined by a mere 1 percent. Surprisingly, during the same period the MF management fees (excluding PMS fees) saw a marginal decline of 3 percent against the same in the previous year.
Then, what caused the sharp decline in profits?
Industry expenditure rose sharply to Rs 3,405 crore in the fiscal year 2010-11, a jump of 20 percent from Rs 2,837 crore in the previous year. Business promotion /brokerage/fund expense and employee cost have surged 40 percent and 12 percent respectively from the previous year.
In addition, equity inflow has seen a sharp dip (down 41%) during the same period. Overall the industry has seen a net outflow of Rs 49,406 crore as compared to a net inflow of Rs 83,081 crore in the previous year. Meanwhile, during the fiscal year 2010-11, AMCs launched 23 equity funds accumulating Rs 3,299 crore (down 45%) as against the previous year where AMCs launched 19 equity funds and accumulated Rs 5,989 crore.
Rs. Cr Mutual Fund Industry March-11 March-10 Change MF Management Fees (excluding PMS) 3,532.6 3,650.3 -3% Equity Contribution to Management Fee 1,049.5 1,101.5 Debt Contribution to Management Fee 2,286.8 2,260.3 Others Contribution to Management Fee 196.3 288.5 Income 4,285.3 4,317.1 -1% Business Promotion/Brokerage/Fund Expense 1,022.9 729.7 40% Employee Cost 1,285.7 1,148.2 12% Expenditure 3,405.5 2,837.5 20% PAT 445.3 891.8 -50%
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