For the first time in five years, HDFC Mutual Fund (HDFC) lost its number one position in terms of assets under management (AUM) to ICICI Prudential Mutual Fund (ICICI). While it has been a nice achievement for ICICI, the fact is that it is not only ICICI's effort but the fall of HDFC that has helped this change.
A) HDFC failed in its effort to disrupt the industry by going direct. In the recent past, HDFC went all out to have investors invest directly, which has upset the distributor community. A lot of independent financial advisors (IFAs) went against them by not selling their funds. This saw ICICI capturing highest mind share among IFAs.
B) The attempt to create disruption in the industry failed because the performance of HDFC wasn't supporting it. In short, its returns in some of its equity funds were not impressive compared to its peers.
