Fund houses witness drop in redemption level

In what can be termed as a relief for the battered domestic mutual fund industry, redemption pressure has eased considerably of late. And, fund managers attribute this trend to changing investor attitude following a steady rise in the stock market since March this year.

“There is a change in investor attitude towards the mutual fund industry. The risk appetite among investors has definitely gone up,” said the chief executive officer (CEO) of a domestic asset management company.

Some of the CEOs Business Standard spoke to termed the current redemption level as “substantially low”.

Head of equities at Fortis Mutual Fund, Sameer Narayan said, “There has not been large redemptions ever since the market has started going up. In fact, there has been a decline in the redemption level.”

The Rs 6.89 lakh crore mutual fund industry registered a marginal growth of 2.83 per cent in its average assets under management (AAUM) last month — the slowest growth so far in the current financial year. The growth rate in AAUM has been showing a declining trend over the last three months.

Gopal Agrawal, head of equity at Mirae Asset, said: “Since the net asset value has recovered, old investors are booking profits. But at the same time, it is being compensated with fresh inflows from new investors, resulting in a net match between inflows and outflows.”

Instead of coming into the market with bulk investments, more and more investors have chosen to come in a staggered manner with systematic investment plans in order to avoid losing money, said a CEO.

Market observers said that at a time when the Securities Exchange Board of India had banned entry load for distributors of mutual fund schemes, lower redemption level was a positive sign for the industry.