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HUGE inflows into its fixed income schemes have propelled HDFC Mutual Fund to the number two position among fund houses, in terms of assets under management. The development is significant because the HDFC-promoted mutual fund is trying to become the first large fund house in the country to get listed on the bourses. In the process, HDFC Mutual has overtaken ICICI Prudential, which had retained the runners-up spot for a long time. But, even as its AUM has grown significantly over the past few months, market watchers point out that HDFC’s best-performing schemes seem to be losing steam. After the technology stocks-led meltdown at the start of the century, HDFC Mutual, for a long time, could stake claim to many of the best-performing schemes in the industry.

“We have been able to grow our business strongly in the past few months on back of our strong brand, expanding our distribution network and fairly consistent investment performance,” says Milind Barve, chief executive at HDFC MF. “We have been developing our relationships with distributors, clients and corporates and are poised for long-term sustainable growth in the future,” he adds. As per recent numbers on the Amfi website, HDFC MF’s average assets under management for August rose Rs 3,107 crore to Rs 53,859 crore, placing it ahead of ICICI Prudential, which witnessed a drop in its AUM to Rs 53,093 crore. As late as March this year, HDFC was behind UTI by around Rs 5,000 crore and lagging ICICI Pru by almost Rs 10,000 crore.

However, distributors say that the growth in the assets of the fund house has been largely due to its officials pushing certain debt products aggressively.

While the total AUM of the fund house has increased from about Rs 49,544 crore in January ’08 to Rs 53,858 crore in August ’08, the share of equity schemes in the total AUM is down from 33.4% to 26.6% during this period.

As far as performances are concerned, most of the equity schemes from the HDFC basket have slipped in performance in the last couple of years, as the adjoining table shows.

“In the heady days of the bull market, some of our schemes may not have stood up against the superlative performance of certain sector funds. But with market cooling off, most of our schemes have not fallen as much as the market,” says Mr Barve defending the performance of his schemes.

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