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Market Losses Put Mutual Fund Profitability Under Pressure
Mutual funds earn fees based partly on how much money they manage.
When share prices fall, the value of some investments can fall too, which may reduce reported profits.
Several large fund companies still had more money under management than a year earlier.
Regular monthly investments, called SIPs, helped keep money flowing into equity funds.
Analysts said this could support the companies, even as September-quarter results face pressure.
One analyst said a longer market decline could make the December quarter more difficult.
Because fees are tied to average assets over the quarter, the earnings effect may be smaller than the market’s overall drop.
Mutual fund companies may face weaker September-quarter results as equity-market mark-to-market gains declined.
SBI Mutual Fund, ICICI Mutual Fund and HDFC Mutual Fund each reported a 4% sequential rise in average AUM.
Year over year, SBI Mutual Fund’s average AUM rose to ₹13.09 lakh crore, while ICICI and HDFC reported ₹11.56 lakh crore and ₹9.69 lakh crore.
Analysts said SIP contributions supported equity flows, accounting for 85% of net equity flows in July and August.
Analysts expect pressure on reported profits and treasury gains, though average AUM may soften the impact of market declines on fee revenue.
- Who
- Mutual fund companies, including SBI Mutual Fund, ICICI Mutual Fund, HDFC Mutual Fund and Aditya Birla Sun Life AMC.
- What
- Equity-market mark-to-market losses are expected to pressure September-quarter profitability, although investment flows and higher average AUM may provide support.
- Where
- India.
- When
- The September quarter; the report was published October 9, 2026.
- Why
- Market declines can reduce investment values and treasury gains, while fund-company fees are linked to average assets under management.
Sources of pressure
Factors cushioning the impact
September-quarter profitability
Sources of pressure
Analysts expect a sequentially weak quarter as lower mark-to-market gains and potentially weaker treasury income weigh on reported profits.
Factors cushioning the impact
Average AUM remained higher than in the previous-year period, and core earnings may hold up despite weaker reported profits.
Market decline and fee revenue
Sources of pressure
Falling markets can reduce equity AUM and weaken blended revenue yields, particularly because equity-oriented schemes carry higher fees.
Factors cushioning the impact
AMC fees are based on average AUM rather than quarter-end market levels, so the earnings effect may be smaller than the Nifty’s roughly 5% quarterly decline.
Outlook for flows
Sources of pressure
If the market correction continues, a larger earnings impact could emerge in the December quarter.
Factors cushioning the impact
SIP flows supported net equity inflows, while an Employees’ Provident Fund Organisation mandate could support Aditya Birla Sun Life AMC’s AUM.
Key facts
- SBI Mutual Fund average AUM
- ₹13.09 lakh crore in the September quarter, up 9% year over year from ₹11.99 lakh crore.
- ICICI Mutual Fund average AUM
- ₹11.56 lakh crore, compared with ₹10.14 lakh crore a year earlier.
- HDFC Mutual Fund average AUM
- ₹9.69 lakh crore, compared with ₹8.81 lakh crore a year earlier.
- Sequential AUM change
- SBI, ICICI and HDFC each reported a 4% rise in average AUM.
- SIP share of net equity flows
- 85% in July and August, according to analyst Shobhit Sharma.
- Nifty performance
- The Nifty declined about 5% during the quarter, with most of the fall occurring in September.
- AMC share performance
- HDFC AMC fell about 14% over three months; Nippon India MF and ABSLife AMC fell about 11% each.
- Potential exception
- Aditya Birla Sun Life AMC may benefit from the full-quarter reflection of an Employees’ Provident Fund Organisation mandate of ₹6 lakh crore.
Quotes
Aditya Agarwala
Chief Investment Officer and co-founder of InvestValue.
“The pressure may show in other income. treasury and seed investments are marked-to-market, so gains could be lower or negative this quarter. Several AMCs could report a sequential fall in net profit even as core profit grows.”
thehindubusinessline.com
“Further, we believe distributors are increasing share of small schemes to sustain overall yield.”
thehindubusinessline.com
Sources
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