“The top 2,300 individual MFDs represent 75% of total MFD debt assets”

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More than two-thirds of individual MFDs’ debt assets under management are concentrated in the hands of a small fraction of individual distributors. A report by IDFC MF shows that just 2,300 individual MFDs account for 75% of MFDs’ total debt assets under management. These individual MFDs together manage an AUM debt of Rs. 1.10 lakh crore of the total Rs. 1.50 lakh crore AUM.

The top 300 individual MFDs alone account for 40% of total assets under management as they have over Rs. 62,000 crore of debt assets under their board.

Please note that the report is based on MFDex data from CAMS and only captures approximately 90% of industry data.

The report notes that large individual MFDs are more likely to recommend debt funds than their smaller counterparts. It shows that the share of debt funds in the total assets under management of the top 10 MFDs was 55%, compared to 22% in the case of the top 1,001 to 5,000 MFDs.

MFD debt fund sales take a hit in fiscal 2022

In a year where individual MFD equity assets under management jumped significantly, MFD debt assets remained mostly flat. According to the report, the AUM debt of MFDs increased by only 1% to Rs. 1.50 lakh crore in the financial year 2022 due to lower gross sales.

The low turnover of debt funds is not limited to MFDs alone. Almost all channels saw negative net sales due to high redemptions and lower inflows in an environment of high interest rate risk and low yields.

During the year, individual MFDs sold debt funds worth Rs. 35,000 crore compared to Rs. 69,000 crore in FY2021. As a result, individual MFDs recorded negative net sales of Rs. 21,600 crore in the last financial year compared to positive net sales of Rs. 22,530 crore in the financial year 2021. Net sales do not include cash and ultra-short.

Weak debt fund sales meant that the number of individual MFDs with more than Rs. 100 crore AUM debt fell by one notch to 205 from 209. 10 crore debt also fell slightly to 2,340 from 2,358.

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