MF assets rise 3.3% in August

Fund managers cautious about outflow from equity schemes.

After seeing their assets shrink for two months in a row, the domestic mutual fund industry got some respite in August. According to latest data from the Association of Mutual Funds in India (Amfi), the average assets under management (AAUM) grew 3.3 per cent to Rs 6.87 lakh crore in August from Rs 6.65 lakh crore in July. The fund houses attributed the rise to better liquidity but cautioned that the outflow was continuing.

Out of the 41 players that operate in the domestic fund market, 10 registered a decline in their AAUM. However, the top five players registered positive inflows. HDFC MF took the lead with growth of 6.5 per cent in assets. Reliance MF, the largest fund house, saw its assets grow 2.28 per cent, while the assets of Birla Sun Life MF grew 4.36 per cent and that of UTI MF 3.16 per cent.

Not all good news
ICICI Prudential MF emerged as the laggard among the top players with negligible growth of 0.08 per cent in assets.

Among the top losers were Deutsche MF (down 22.12 per cent), followed by Edelweiss MF (down 21.15 per cent), Fortis MF (down 15.56 per cent) and LIC MF (down 14.47 per cent).

“The real worry will come next week when funds declare inflows and outflows in different asset classes. The outflow from equity continued in August, too. I would not be surprised to see a redemption of over Rs 2,000 crore from equity alone in August,” said the chief executive officer (CEO) of a medium-sized fund house.

In fact, industry CEOs Business Standard spoke to sounded disturbed with the monthly assets under management. “What we need to focus on is the retail participation in mutual funds. This declaration of monthly AAUM disturbs the industry and bring undue competition,” said one.

Though August brought some relief, the assets are still nowhere close to what they were in May (Rs 8.03 lakh crore). The drastic fall of close to 16 per cent – the second-largest after the October crisis of 2008 – was in June due to advance tax numbers, auction of 3G spectrum and banks pulling out money at the end of the quarter.

Two months on, the funds have not yet made their re-entry. “The money that went out of the system in June will take much longer to come back,” said a chief marketing officer.