PGIM India Mutual Fund is on course to double the assets under its management at over Rs 14,000 crore by the end of this fiscal, a senior company official said. The fund house, a fully-owned subsidiary of the US-based Prudential Group‘s Prudential Global Investment Managers, on Friday launched its maiden small caps fund with a Rs 500-crore of targeted corpus.
The fund house had closed FY21 with an AUM of around Rs 7,000 crore. It added Rs 2,000 crore to the kitty during the first quarter of the fiscal, a 28 per cent sequential growth.
“We had closed FY21 with an AUM of a little over Rs 7,000 crore and we are on course to double it to Rs 14,000 crore, having already grown over 28 per cent or Rs 2,000 crore over the March numbers, to Rs 9,000 crore as of end June,” Ajit
, the chief executive, PGIM India MF, told .
The growth rate is commendable as in spite of the record market rally, inflows into equity mutual funds had been on a continuous decline for months last fiscal. PGIM India has the maximum exposure to equity schemes with Rs 6,500 crore of its total AUM is in equities funds only.
But equity funds had the best inflows in May when it grew by Rs 10,083 crore, the highest in 14 months, according to Amfi data.
Equity schemes saw a net inflow of Rs 3,437 crore in April and Rs 9,115 crore in March. Prior to this, equity schemes had consistently saw outflows for eight straight months from July 2020 to February 2021.
On the contrary, exchange traded funds (ETFs) are getting a lot of attention from investors, with NSE listing the 100th such instrument. ETF assets under management stood at Rs 3.16 lakh crore in end May 2021, more than 13.8 times growth in five years compared to Rs 23,000 crore as of end-April 2016 among 60 ETFs.
On the dichotomy of a rallying market and falling inflows in to equity funds, Menon, who believes the market to continue to rally if there is no third wave, says outflows are partly due to the fact that millions of investors have entered the market in the pandemic year and many of them pulled out money from mutual funds and pumped directly into the equities.
His optimism for the market buoyancy to continue also stems from a likely jump in corporate earnings and the positive trends on the pandemic side with falling infections and rising vaccinations, because markets move on by discounting the future based in the emerging trends.
Of the total Rs 6,500 crore of equity funds AUM, Rs 1,400 crore from its international funds, Menon said.
He said to drive the targeted growth the fund house will be launching more funds in the larger mi-caps, flexi schemes, small caps and retirement funds, where it is absent now, later this year.
Another growth area is SIPs which he said has been doing extremely well for them. In the past year, they have been adding on average Rs 5 crore to the book every month, and adding 25,000-27,000 new folios every month, he said.
On the new small caps fund, Menon said they are planning to raise Rs 500 crore and if the fund gets Rs 500 crore subscription at the NFO level itself that opens on Friday and closes on July 23, they will close the fund at NFO level only.
The PGIM India small cap fund is a mix of top-down and bottom-up investment approaches based on the Nifty small cap 100 and aims to generate long-term capital formation primarily through various investments made in equity and equity-linked schemes of small-cap companies.
The new fund will invest at least 65 per cent of its corpus in small-cap companies and seek to leverage the momentum of other equity and equity-related products to make the portfolio attractive, Menon said.
The 45-player fund industry saw net inflows of Rs 15,320 crore across all segments in June compared to an outflow of Rs 38,602 crore in May, taking the assets under management to an all-time high of Rs 33.67 lakh crore in end June from Rs 33 lakh crore in May.