Mutual funds beat quarter-end effect

Assets rise during the second quarter’s last month - a first since June 2009

For the first time in the last five quarters, the domestic mutual fund industry has managed to overcome the quarter-end effect and registered growth in its average assets under management (AAUM) in September. The growth came thanks to the fixed-income category and the good liquidity condition in the first half of the month.

Contrary to the market expectation, the domestic mutual fund market has continued to grow its assets for the second month in a row. In fact, compared with the immediate past month’s performance, the growth is a little faster. The last such instance was in June 2009, when the industry’s assets had grown 5.03 per cent month-on-month despite it being a quarter-end month.
 

MUTUALLY BENEFICIAL TOP 5 MFS AAUM
Fund House	Assets in August	Assets in  September	Change (%)
HDFC MF	90,178.73	93,105.57	3.25
Birla Sun Life MF	64,217.51	67,421.34	4.99
UTI MF	64,172.80	67,617.72	5.37
Reliance MF	1,04,511.22

1,07,748.54

3.10 ICICI MF68,768.6369,727.521.39 Figures in Rs crore                                                         Change (month-on-month)
Source : Amfi & BS Research Bureau

As per the latest statistics available from the industry body, Association of Mutual Funds in India (Amfi), AAUM of the fund industry grew 3.7 per cent to Rs 7.12 lakh crore in September against Rs 6.87 lakh crore last month.

Industry experts had anticipated that the quarter-end phenomenon would again erode the assets of the industry on the back of banks and corporates pulling out funds. “The first half of the month saw a good liquidity situation which, however, got tightened by the end of the month,” said the chief executive officer of a mid-sized fund house.

In June, the industry saw the second-highest fall in its assets after the crisis of October 2008, when the AAUM dipped by Rs 1.27 lakh crore or 16 per cent.

Of the 43 existing fund houses, 29 players managed to remain in the positive territory of growth in the month. Among the top five players, UTI MF led the growth and added 5.37 per cent more assets in its kitty, replacing Birla Sun Life MF as the fourth largest fund in terms of AAUM.

The assets of Birla Sun Life MF grew 4.99 per cent, followed by HDFC MF and Reliance MF which saw their assets increase by 3.25 per cent and 3.1 per cent respectively. ICICI MF remained a laggard, with a growth of merely 1.39 per cent in the month.

“The first two weeks of the month saw reasonable growth in the equity segment. But, it was the fixed income side where the money kept pouring in. Though banks did pull out the money at the end of the month, the average assets did not fall as expected earlier,” said the chief investment officer of a large-sized fund house.

Agreeing with him, the chief marketing officer of one of the leading fund houses said inflows through monthly income plans (MIPs) continued to remain strong. However, he added that the equity segment continued to see redemptions. The category-wise data will be released by the industry body next week. “Though money is coming into equity schemes majorly through systematic investment plans (SIPs), redemptions are equally strong amid the market nearing its all-time high,” he added.

Fund managers Business Standard spoke to said redemptions from equity segments were likely to remain in line with what was seen in the previous months. If this stands true, the industry might end up seeing yet another net outflow of Rs 2,500-3,000 crore from its equity assets, which currently make up one-fourth of the total assets under management.