MFs oppose monthly AUM declaration

Amfi board to discuss demand that only retail numbers be released every month.

The continuing fall in their assets under management (AUM), especially on the equities side, has forced fund houses to approach the industry body, the Association of Mutual Funds in India (Amfi), to stop publishing this data on a monthly basis.

“Most of us feel that monthly data do not give the correct picture. In some months, there are huge withdrawals by companies and high net worth individuals due to advance tax payments. This amount is reinvested soon. But there is too much hype over these periodic outflows,” said the CEO of one of the largest fund houses.
  

FAST FIGURES
Month	AAUM

Chg (%) Net inflow/(outflow) January7,61,440.37-4.1497,242 February7,81,525.722.646,365 March7,47,338.62-4.37(1,62,165) April7,69,129.612.921,85,956 May8,03,559.064.48-62,960 June6,75,863.57-15.89(1,19,449) July6,65,567.42-1.52

NA

All figures in Rs crore; Change (%) is month-on-month
Source: Amfi

He explained that institutional money was a direct reflection of liquidity in the system, which fluctuates. Instead, the industry has said that monthly data of only the retail segment should be declared. “Retail money is mostly long term. It will provide a better picture,” added the CEO.

Every month, MF houses have to declare their average AUM at the beginning of the month, on Amfi’s website. Industry players feel the overemphasis on AUM leads to unhealthy competition among the players. “There is a huge rush to garner assets, even if they are short term, to shore up the numbers,” said another industry source.

It is learnt that Amfi will discuss the issue in its board meeting soon.

Amid several regulatory changes in the past year, the 40-player domestic fund market is still finding it tough to adjust.

The industry is continuously losing folios and equity assets.

Banning entry load on equity schemes last year was the biggest game changer, followed by more regulatory measures. “The industry is still settling down to these changes. There are new guidelines on debt instruments whereby they will be marked-to-market. This may lead to some uncertainty in the debt market as well,” said an insider.

In June, the industry’s assets dipped around 16 per cent, the sharpest fall since the October crisis of 2008.

They further slipped in July, though marginally, by 1.5 per cent. In contrast, the first month of a new quarter normally sees inflows, as was witnessed last July when assets rose by Rs 20,000 crore.