Mirae Asset MF breaks into Rs 50,000-cr AUM club

Equity is the bigger business for Mirae Asset MF, with over 80% of assets coming from equity linked products

Kumar Shankar Roy Nov 6, 2020

Mirae AssetMirae Asset Mutual Fund has firmly broken into the Rs 50,000-crore asset size club, close to 13 years after the South Korean financial group set foot in India. As per November 4 daily assets under management data available on AMFI website, Mirae Asset Mutual Fund across 16 schemes manages over Rs 54,000 crore. The final tally could be bigger. At present, Mirae Asset MF has 12 equity schemes, 7 debt schemes, 3 hybrid schemes.

Humble start

Mirae Asset India started its journey in India with establishment of asset management business with a seed capital of USD 50 million in 2007. Today, the fund-house has over 28 lakh investor folios and investors each month pump in over Rs 550 crore in Systematic Investment Plans or SIPs.

For many years though, Mirae struggled to grow its asset size. For example, in 2008, Mirae’s average assets under management (AAUM) was Rs 1,390 crore. This number languished and inched up to only Rs 1,629 crore till 2014. And then, growth began at a furious pace, with 2016 seeing Mirae cross the Rs 6,000 crore mark. In this year, Swarup Mohanty was elevated to CEO position in Mirae Asset MF. He joined them in 2011.

By 2017, Mirae had more than doubled to Rs 14,348 crore. In 2018, Mirae had Rs 22,089 crore and even at that scale, by 2018 it virtually doubled to Rs 41,887 crore by 2019.

Below is a graphic on Mirae AAUM growth trend.

Growth era

In the last few years, Mirae Asset MF has been among the fastest-growing fund houses in the country, and between March 2019 and March 2020 its asset size grew by a scintillating 78% — the fastest among the top-15 club. SBI Mutual Fund is the undisputed numero uno in the Indian MF industry.

Given the cut-throat competition and lack of bank partner support unlike the 3 biggest AMCs (SBI, HDFC and ICICI Pru), Mirae Asset MF has done quite well. Many AMCs have been launched over the years but are yet to break into the Rs 50,000-crore asset club. It is a tough business when you are small in terms of asset under management (AUM) because fixed costs are high and the base on which the company earns is small.

While MF business has a very long runway of growth, the success of a mutual fund depends on 4 pillars – brand, distribution, risk management and performance. Over the years, only a few players have managed to get these 4 pillars right and have managed to achieve scale. The industry is reasonably consolidated with the top 10 players controlling about 84% of the market. Given the scale economics, it becomes tough for a new entrant in this space.

Mirae Asset MF seems to have used 3 levers of growth: firstly, have underlying asset experience some growth, in line with the returns generated; secondly, existing investors have added more money over the years as they channel their savings into investments; thirdly, acquisition of new customers.

Equity mainstay

Very roughly, every Rs 1 crore of equity asset is equivalent to Rs 3 crore of debt asset and, Rs 6-7 crore of liquid fund AUM. Equity is the bigger business for Mirae Asset MF, with over 80% of assets coming from equity linked products. In a quick time, the fund house has managed to take its schemes in the big league across many key categories. Neelesh Surana is the Chief Investment Officer.

Mirae Asset Large Cap Fund manages Rs 19,291.33 crore, the 3rd largest actively managed largecap scheme after ICICI Prudential Bluechip Fund (Rs 24,076.54 crore) and SBI Bluechip Fund (Rs 22,986.93 crore).

Mirae Asset Emerging Bluechip, which manages Rs 12,197.47 crore, is the biggest large & midcap fund in a category where the next biggest fund is about 50% small (Canara Robeco Emerging Equities).

Curiously enough, Mirae Asset MF has no multicap fund. There are 35 multicap schemes jostling for investor attention.

Mirae Asset Midcap Fund, which manages Rs 2,614.36 crore, is the 11th scheme by size in the category. Importantly, it’s bigger than the midcap funds from much larger AMCs like Aditya Birla Sun Life, and ICICI Prudential.

The ELSS category is very popular, with tax-saving funds always drawing investments during particular periods of the financial year. Mirae Asset Tax Saver Fund, which manages Rs 4,560.09 crore, is the 8th largest scheme among peers. The about 5-year fund is in fact larger than older schemes such as Franklin Tax Shield (launched in 1999), L&T Tax Advantage (launched in 2006) and IDFC Tax Advantage (launched in 2008).

Mirae Asset Focused Fund manages Rs 3,761.28 crore, Mirae Asset Great Consumer Fund manages Rs 999.48 crore and Mirae Asset Healthcare Fund manages Rs 1,041.75 crore. Mirae Asset Nifty 50 ETF manages Rs 87.03 crore.

Debt, hybrid

On the debt side, Mirae Asset Cash Management managing Rs 3,341.75 crore is its biggest in-house offering, followed by Mirae Asset Savings Fund (Rs 853.96 crore), Mirae Asset Short Term Fund (Rs 644.99 crore), Mirae Asset Overnight Fund (Rs 391.53 crore), Mirae Asset Ultra Short Duration Fund (Rs 216.42 crore) and Mirae Asset Dynamic Bond Fund (Rs 130.68 crore).

On the hybrid product side, Mirae Asset Hybrid Equity Fund manages Rs 3,872.09 crore and Mirae Asset Equity Savings Fund manages Rs 120.28 crore.

Mahendra Kumar Jajoo is the Chief Investment Officer (fixed income).

Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. Kumar is a financial journalist, with a functional experience of 15 years. He tracks mutual funds, insurance, pension, PMS, fixed income/debt and alternative investments markets closely. He has worked for The Times of India, The Hindu Business Line, Deccan Chronicle Group, DNA, and Value Research, among others, across different cities in India. He is deeply interested in marrying data insights with actionable opinion. He can be contacted at [email protected].