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India's mutual fund sector lost about 5.5 per cent of its assets in September as its assets under management (AUM) dipped to Rs 11.87 lakh crore against Rs 12.55 lakh crore in August — a drop of Rs 68,000 crore. Further, with this decline, the sector has lost one-tenth of its assets ever since it hit the high of Rs 13 lakh crore mark in July.
Majority of the fall has come in the liquid and money market category. These schemes, put together, witnessed an erosion of about Rs 56,000 crore alone or a fall of 24 per cent in September to Rs 1.78 lakh crore. Sector executives termed it a September quarter closing phenomenon and asserted that soon this money will find its way into the sector by mid-October.
Typically, large institutions and companies invest in short-term schemes, but tend to redeem units at quarter-end to reflect in their balance sheets.
Though, the money market category saw a severe hit, it appears all was not well with the sector when it comes to the equity segment.
The monthly net inflows hit the 10-month low at Rs 5,444 crore. It is the second lowest inflow into equity schemes since May 2014. Compared with the immediate previous month, the net inflows were down a whopping 60 per cent. In August, net inflows in the category was to the tune of Rs 9,156 crore. Steep volatility in the stock markets seems to have impacted flows in the equity schemes.
However, what is worrying for the sector is the fact that gross equity sales too have declined by around 25 per cent to Rs 12,552 crore in September compared with Rs 16,611 crore in August.
The equity AUM rose 1 per cent to Rs 3.86 lakh crore against Rs 3.82 lakh crore.
