Quarterly disclosures curb volatility

Mutual fund industry registers growth for past three quarters; CEOs, analysts welcome trend.

Domestic mutual funds have been able to arrest the volatility in their assets under management (AUM) over the past two quarters. The decision by the Association of Mutual Funds in India (Amfi) of disclosing the average AUM on a quarterly basis instead of the earlier monthly one has restored stability in their assets to some extent.

During the June quarter, the average AUM registered growth of six per cent at Rs 7.43 lakh crore, compared with Rs 7 lakh crore in the March quarter. With this growth, the industry has attained its highest average AUM since May 2010.

Milind Barve, chief executive officer (CEO) of the country’s second largest fund house, HDFC Mutual Fund, says, “These are the 90-days average AUM. Earlier, when AUM data were released monthly, it was showing unnecessary volatility in the industry assets.”

The growth in assets is an encouraging trend. For the past three quarters, the industry has been showing positive growth, despite the quarter-end phenomenon when banks and companies tend to pull out money from funds to meet advance tax and other requirements.

Amfi CEO H N Sinor adds, “During the past five-six months, growth in the equity segment has been a positive signal. The rise in systematic investment plans (SIPs) is encouraging.”

Agrees Arindam Ghosh, CEO of Mirae Asset Global Investments (India): “Investors’ appetite for MFs is building up. Correction in equity markets has helped improve inflows in the fund industry.”

The category-wise data would come in the later part of this week. However, going by the trend in May, analysts are assuming June would be yet another month of net inflow in the equity segments. In May, equity MFs saw a little over Rs 1,500 crore of net inflows.

Industry CEOs had told Business Standard last year that monthly release of asset statistics made players unstable and propel undue competition in garnering assets, an unhealthy practice. According to one of the top MF houses’ CEO, who did not wish to be named for this report, “Though rising average assets is a healthy signal, we need to watch out for the quality of the assets as well. We need to see which categories (of schemes) are doing better, equity schemes or money market ones which are witnessing fund inflows.”

Among the top five players, ICICI MF registered the highest growth of 8.5 per cent, as its assets inched closer to Rs 80,000 crore. The average assets of HDFC MF in the quarter ended June grew 6.7 per cent to Rs 92,032 crore, followed by Birla Sun Life MF which posted growth of a little less than six per cent, for assets of Rs 67,475 crore. UTI MF witnessed 2.85 per cent growth in its assets. The largest fund house, Reliance MF, showed a marginal decline of 0.3 per cent in its average assets but continued to maintain assets of over Rs 1 lakh crore.