ICICI Prudential AMC Earns 53 Paise a Year on Every ₹100 It Manages, and Keeps 37 Before Tax

The idea in one sentence

A fund house is paid a thin yearly slice of other people's money, and ICICI Prudential AMC's own figures show the slice and the costs taken out of it, but not who gave way when the regulator trimmed the charge in April: its managers say it was the distributor and not the fund house.

The fact that makes a reader stop

On 12 October, ICICI Prudential Asset Management Company filed its results for July to September [RES] and a presentation [PRES]. An asset management company, or AMC, is the firm that manages the money investors put into a mutual fund's schemes. It charges a yearly fee on that money.

Slide 5 carries two small numbers: a revenue yield of 0.53% and an operating profit yield of 0.37%. Slide 28 walks from one to the other, in "bps of AUM". A basis point (bp) is one hundredth of a percent: one paisa a year on ₹100. AUM is assets under management, the money being looked after.

Source: [PRES] slide 28, for April to September 2026, scaled up to a full year. PMS (portfolio management services) and AIF (alternative investment funds) are products the company runs outside the mutual fund. The company lists these measures as non-GAAP, that is, outside the accounting standards (slide 32). They are not part of the reviewed results.

Two points of definition.

• The profit. Operating revenue is the revenue from operations in the results, ₹3,238.01 crore for the half year. Operating profit is that revenue less all expenses, ₹2,280.64 crore. It leaves out other income of ₹197.71 crore, which comes from the company's own investments ([RES] cash flow statement).
• The assets. The slide does not say which assets it divides by. Dividing by the average of the mutual fund, PMS, AIF and advisory assets for the two quarters, about ₹12.19 lakh crore, and scaling by days reproduces all five figures (our arithmetic).

So the fund house spends about 16 paise of the 53. Staff are the largest part: ₹416.76 crore in the half year, about 6.8 paise per ₹100 (our arithmetic for both).

A note on the accounts. The September figures are unaudited. The auditors, Walker Chandiok & Co LLP, carried out a limited review, a lighter check than an audit, and their conclusion is not modified. They note that the year-ago figures, restated after the company took over some funds from ICICI Venture on 1 April, "have not been subjected to audit or review" ([RES] review report and note 8). Management says the restatement is not material (note 7). Every year-on-year growth rate below rests on those figures.

One ₹100, followed

Take ₹100 that a saver holds in an equity scheme through an SIP, a fixed sum invested every month.

The 53 paise is an average across very different products. On its July call the company gave what it calls its "margins" on each, for the June quarter, annualised ([CALL-JUL] page 4; shares from [PRES]):

Equity schemes were 56.5% of the mutual fund assets and about 80% of the fees. Passive schemes were 17.2% of the assets and under 5% of the fees (our arithmetic: assets multiplied by rate). The five products add up to within 1% of the mutual fund revenue reported for the quarter, so we read these rates as fees earned, not profit.

So our saver's ₹100 earns the fund house about 66 paise a year, for every year the money stays.

This is not what the saver pays. The saver pays the scheme's expense ratio, a yearly charge taken out of the scheme. The filings we read do not give it. The finance chief said the commission line in the accounts is the distribution fee on PMS and AIF products, which, unlike in a mutual fund, is "routed through the AMC" ([CALL-JUL] pages 12 and 13). Our reading, which no filing spells out: a mutual fund distributor is paid out of the scheme's charge, and the 66 paise is the fund house's part alone.

The mechanism: why 37 of the 53 paise stay

1. The regulator limits the charge, and the charge falls as a scheme grows. The managing director said SEBI regulates scheme expenses and "the expenses keep on coming down as the size of your fund increases" ([CALL-JUL] page 28). ICICI Prudential's equity rate was 67 paise for FY26 and 66 for the June quarter ([CALL-APR] page 4; [CALL-JUL] page 4).

2. When the charge was trimmed in April, the fund houses say their earnings held, and all three point to distributor commissions. HDFC AMC's chief executive listed the 1 April changes: an extra 5 basis points that schemes could charge was removed, the expense ratio was redefined to sit apart from statutory levies, and the limits on brokerage were revised ([HDFC-CALL] page 6). He spoke of an accounting change and cautioned against reading much into "the first few months" (pages 4 and 5). Our reading: rates before and after April may not be like for like.

In April, ICICI Prudential's finance chief sized the effect: "on a gross basis before any pay out there is an impact of 3 to 4 basis point" ([CALL-APR] page 12). In July the company said: "There is no negative impact on account of changes in the TER regulations" ([CALL-JUL] media call, page 4). TER is the total expense ratio. An analyst asked if it was "fair to assume that you have passed on all to the distributors?" The answer was "Yes." (page 25).

Two other large fund houses gave similar accounts.

Sources: [CALL-JUL] pages 4, 7 and 25; [HDFC-CALL] pages 2, 3, 5, 6 and 17; [HDFC-PRES] slide 29; [NAM-CALL] pages 4 and 10; [PRES] slides 28 and 32. Definitions differ: ICICI Prudential's equity schemes are actively managed, HDFC AMC's 58 is its "total blended equity" figure, and Nippon's 54 leaves out arbitrage. ICICI Prudential's 52.4 includes PMS and AIF; the 46 is our arithmetic (the quarter's mutual fund revenue, times four, over mutual fund assets).

Our reading, which the filings do not test: the fund house sets the commission, and the sellers are many. ICICI Prudential counts over 1,18,000 distribution partners. Of its equity scheme assets, mutual fund distributors account for 36.1%, national distributors 15.9%, other banks 10.6% and the parent, ICICI Bank, 7.5%, the smallest share, while 29.9% is direct, with no distributor ([PRES] slide 20). The documents do not say how much any one distributor or bank sells.

3. Running costs have grown more slowly than revenue so far. In the half year, revenue from operations grew 16.9% and expenses other than commission 11.5% (our arithmetic). In the September quarter alone the gap narrowed: those expenses grew 13.8%, as fast as assets at 13.7% (our arithmetic; [PRES] slides 11 and 25). Per ₹100 managed, running costs rose from 10.7 paise in FY26 to 11.5 in this half year (FY26 by our arithmetic, [CALL-APR] page 6). Part of the rise is a share-option charge of ₹28.0 crore that is new this year ([RES] cash flow statement). The profit per ₹100 held near 37 paise because the fee rose from 52 to 53. At HDFC AMC, total expenses rose 26% in the June quarter and revenue 14% ([HDFC-PRES] slide 26). Our reading: revenue rises with markets and costs with staff, so the gap depends on markets.

The slice per ₹100 has moved little. ICICI Prudential's operating margin was 35.9 paise in FY25, 37.6 in FY26 and 37.3 in this half year ([CALL-APR] page 6; [PRES] slide 28). HDFC AMC's was 35, 36, 35 and 35 from FY24 to the June quarter ([HDFC-PRES] slide 29). Our reading: these two firms earn a roughly fixed slice of a pile that grows with markets and savings.

Where this breaks

It is the fund houses' own account. No document we read shows what a distributor was paid before and after April. The statements come from July calls and cover one quarter; the transcript of the 12 October call is not yet filed. An analyst asked HDFC AMC whether this "pricing power with distributors" would last. Its chief executive replied that the economics between fund house and distributor "doesn't change depending on the market", and called the relationship a partnership ([HDFC-CALL] page 12). That is one side's view.

Size does not show up as lower cost here. Running costs were about 11 paise per ₹100 at both ICICI Prudential and HDFC AMC in the June quarter, though the first manages about a fifth more mutual fund money (our arithmetic for ICICI Prudential's cost and the size gap). Three large fund houses and no small one cannot show that scale lowers cost.

The mix can turn. Passive assets grew 33.2% over the year and equity assets 16.3% ([PRES] slides 13 and 14). Passive money earns 12 paise against 66. In April the finance chief agreed with an analyst that a rising share of ETFs explained a fall in the blended rate in the March quarter ([CALL-APR] pages 13 and 14).

Markets set the base. The fee is a percentage of market value. Our reading: if markets fall, revenue falls at once and salaries do not. The 37 paise comes from a year in which assets under management grew 13.7% ([PRES] slide 11).

What follows from the documents

Operating profit and net profit moved in opposite directions. Against the June quarter, operating profit rose 7.4% and profit after tax fell 7.8%. The difference is other income, which dropped from ₹180.80 crore to ₹16.91 crore. It comes from the company's own investments of ₹5,186.6 crore ([PRES] slide 29). Our reading: other income follows the market, not the business, and is no part of the 37 paise.

The commission line is a different business. It grew 25.2% in the half year and 30.3% in the quarter. By the company's account it rises with PMS and AIF sales. There, about half the fee goes to the seller: 191 paise earned, 95 kept, at the June rates ([CALL-JUL] page 5). The seller's share has risen, from about 46% of the fee in the September quarter a year ago to about 50% (our arithmetic; [PRES] slides 25 and 28). The filings do not say why. It is the one place here where a seller's pay can be seen.

What to watch each quarter: the equity rate, the passive and direct shares, running costs per ₹100, and what fund houses say about commissions.

Back to the ₹100

The saver's ₹100 in an equity scheme earned ICICI Prudential AMC about 66 paise a year at the June rate. Across everything it manages the figure is 53 paise, and 37 remain after costs and before tax.

The fund house does not set the price freely. The regulator limits it, and it falls as schemes grow. When the charge was trimmed in April, three large fund houses each said the change left its earnings or margins intact, and each pointed to what it pays distributors. Our reading: if that holds, part of the strength of the business lies in its position against those who sell its funds. Much of the rest is mix: equity schemes earn 66 paise and passive schemes 12. Insurance is the contrast: there the regulator's own data showed payments to distributors growing four to five times faster than premiums (our piece on IRDAI's proposed insurance distribution reforms).

Sources

• [PRES] ICICI Prudential AMC, investor presentation and performance highlights, quarter and half year ended 30 September 2026, filed 12 October 2026 (NSE)
• [RES] ICICI Prudential AMC, unaudited results with limited review report, quarter and half year ended 30 September 2026, filed 12 October 2026 (NSE)
• [CALL-JUL] ICICI Prudential AMC, transcripts of the media call and earnings call of 13 July 2026, filed 16 July 2026 (NSE)
• [CALL-APR] ICICI Prudential AMC, transcripts of the media call and earnings call of 13 April 2026, filed 17 April 2026 (NSE)
• [HDFC-CALL] HDFC AMC, transcript of the earnings call of 15 July 2026, filed 17 July 2026 (NSE)
• [HDFC-PRES] HDFC AMC, investor presentation for the June 2026 quarter, filed 15 July 2026 (NSE)
• [NAM-CALL] Nippon Life India Asset Management, transcript of the earnings call of 22 July 2026, filed 23 July 2026 (NSE)

Educational research, not investment advice. Every figure above is drawn from the companies' own filings, read from the primary documents on 13 October 2026; differences, ratios and percentages marked "our arithmetic" are ours. The yields are the companies' own measures and are not audited or reviewed. We have not read any scheme's expense ratio, and nothing here says what an investor in any scheme pays. No buy/sell recommendations, no price targets, no share prices. Moat & Margin is not a SEBI-registered Research Analyst or Investment Adviser.