How small Mutual Funds are innovating and striving to stay relevant in an industry dominated by large players..

Nice story on how certain small mutual funds in India are trying to survive in a market owned by few large players.

All these stories are really ironical in a way. You hear any MF manager and he will talk of the need for introducing competition in the sector and having more players and so on. But their own sector is concentrated:

The assets under management (AUM) of the domestic mutual fund (MF) sector have for the first time breached Rs 11 lakh crore. However, as in most other sectors, almost 80 per cent of the MF assets are managed by the top 10 entities. The other 33 asset management companies (AMCs) battle for the rest.

The going has always been tough for the smaller ones but with recent regulatory changes such as a higher capital requirement of Rs 50 crore, things have got even more so. Round-the-clock helplines, putting in more funds, direct investing and specialised exchange-traded funds (ETFs) are some steps taken to stay afloat. Indiabulls MF, which manages assets worth around Rs 3,000 crore, offers missed-call portfolio statements and 24-hour call centres. It recently saw infusion of capital by its sponsor, Indiabulls Housing Finance, to take its net worth to Rs 61 crore, to meet the new Rs 50 crore minimum capital requirement.

Interesting to see how these small MFs are trying to create niche for themselves and making different offers.

Finance is one area where these things happen naturally. The scale matters a lot here. In other products, one can lower prices, introduce a new technology and so on. In finance products, people look for safety much more and established brand names / wide distribution and so on play a huge role.

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