Asset Mgmt Cos - negative development As per amendment propos | DM Stocks

Asset Mgmt Cos - negative development

As per amendment proposed in finance bill, indexation benefit for debt mutual funds to be removed, will be subject to short term cap gains

* If this amendment goes through than tax arbitrage on long term debt schemes (more than 3 years) will be gone and to that extent it will now compete with other debt instruments. This could slow down new flows into debt schemes.

* Debt schemes AUM (ex liquid) is around INR 8lakh crs ie 20% of total industry AUM. The yields made on this is half of that of equity funds. So the contribution for AMCs from debt funds is lower. But nevertheless this is incremental negative.

For HDFCAMC revenue contribution from debt funds (ex liquid) is around 13-14%, while that for Birla AMC it is ~20%.