A) HDFC failed in its effort to disrupt the industry by going direct. In the recent past, HDFC went all out to have investors invest directly, which has upset the distributor community. A lot of independent financial advisors (IFAs) went against them by not selling their funds. This saw ICICI capturing highest mind share among IFAs.
B) The attempt to create disruption in the industry failed because the performance of HDFC wasn't supporting it. In short, its returns in some of its equity funds were not impressive compared to its peers.
C) On the other hand, ICICI used its balance sheet to its advantage and kept launching closed-ended equity funds in the past couple of years, which has helped them garner AUM.
D) Unlike HDFC, ICICI didn't take the 'direct' risk and kept the IFAs and distributor community happy by working with them to sell their funds.
E) The most important thing that worked for ICICI was that it kept on marketing its funds very well, and also timed the funds according to the season. A strategy that worked, coupled with good returns.
There is no harm in being ambitious but the question is at what cost. Both HDFC and ICICI are similar in their thought process and have always been interested in growing their AUMs. Over the past decade, big funds have used their muscle to grow their business and have not bothered about the industry. In the bargain, smaller funds have suffered.
In fact, there have been rumours that ICICI never got the top position of a chairman or a vice chairman at AMFI because no one votes for them. This is because they feel there is no place for small funds and only big boys should rule the roost.
This is sad, but as it is ICICI today is India's number one mutual fund in terms of AUM. They only question will be how long they will be able to keep the flag flying high in an industry whose primary objective even after two decades since private players were allowed to run mutual fund business in India still loves to garner AUM.