Milind Barve, managing director, HDFC Asset Management Company, said, “This move would ensure that investors, both retail and institutional, are given a true picture of the assets managed during a month.”
HDFC Mutual Fund has declared an AAUM of Rs 11,860.66 crore in June compared with an asset under management (AUM) of Rs 11,960.64 crore during the period. Under the Securities and Exchange of India (Sebi) guidelines, it is mandatory for every mutual fund to declare its AUM at the end of each month.
“In a race to show growth in AUM month-on-month, some funds stretch themselves on the last few days of the month to garner assets by unethical means,” industry observers said.
Some funds offer higher commissions to distributors to invest in schemes at month ends, which will result in higher AUMs. These distributors rarely stay with the scheme after the first week of the ensuing month.
This leads to artificial inflation of AUM, which benefits only asset management companies and their distributors,” industry observers point out. “To show a more realistic picture, the need of the hour is to be more transparent and disclose the AAUM,” they said.
AAUM is calculated by adding the total AUM at the close of each day of a month divided by the number of days in that particular month. Barve said, “AAUM represents the size of assets in a more realistic manner as compared to the current practice of announcing AUM based on the last day of the month.”
It may be recalled that HDFC AMC has pioneered various initiatives such as anytime mutual fund, systematic withdrawal advantage plan and dedicated investor services centres.
As on June 30, 2003, four funds have AUMs over Rs 10,000 crore. The topper in this list is UTI Asset Management (Rs 16,015 crore) followed by Prudential ICICI (Rs 12,637 crore), HDFC Asset Management (Rs 11,960.64 crore) and Templeton Asset Management (Rs 11,152 crore).
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