Amtek episode causes dent in JP Morgan AMC's assets

AUM declines by Rs 2,200 cr, or 15% q-o-q, to Rs 12,455 cr at the end of September

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The US-headquartered fund house's India arm has seen its assets under management (AUM) drop by 15 per cent, even as overall sectoral assets grew by five per cent. In absolute terms, the fund house’s assets fell by Rs 2,200 crore, to Rs 12,455 crore at the end of the September quarter from Rs 14,683 crore at the end of the previous one.

JPMorgan had exposure of nearly Rs 200 crore through two of its debt schemes to Amtek's non-convertible debentures. The default was late last month.

The drop in assets is believed to have been caused by the frantic redemptions by investors in the two troubled units.

The schemes -- JPMorgan India Treasury Fund and JPMorgan India Short Term Income Fund -- had collective assets of Rs 2,964 crore before the Amtek crisis. In September, rating agencies suspended coverage or downgraded Amtek’s debt paper. The move forced the fund house to limit redemption in the two schemes. The curbs were removed this week, after JPMorgan obtained unit holders’ approval to segregate the assets exposed to the Amtek paper.

The sharp decline in assets has seen JPMorgan slip one notch in ranking. The fund house now ranks 17th behind JM Financial Mutual Fund, which saw its assets grow 36 per cent to Rs 15,858 crore. LIC Nomura MF, ranked 19th, is less than Rs 1,300 crore behind JPMorgan AMC, with assets of Rs 11,157 crore.

“Investor confidence towards the fund house has taken a beating. It will have to move quickly with corrective action,” said a senior sector official, asking not to be named.

Overall AUM of the MF sector grew nearly five per cent to Rs 12.92 lakh crore during the September quarter. All major fund houses reported an increase in their assets.