The Hindu Business Line : MF asset base falls by Rs 18,506 cr in Aug

Snapshot
Industry now managing Rs 4,67,623 crore in assets compared to Rs 4,86,129 crore in July.
The dip of 3.8 per cent has seen most fund houses registering a fall in the net inflows.

Our Bureau

Mumbai, Sept. 3

The asset base of the mutual fund industry fell by Rs 18,506 crore in August from the levels of the previous month, according to the data released by the Association of Mutual Funds in India (AMFI).

The industry now manages Rs 4,67,623 crore in assets compared to Rs 4,86,129 crore in July.

Mutual fund managers attribute the decline to a combination of hardening call money rates and volatility in the equity market.

Mr Suresh Soni, Chief Investment Officer of Deutsche Asset Management, said, ‘There was a little bit of withdrawals from liquid funds, the incremental flow in mutual funds was subdued also because there was volatility in the equity markets and so the investors preferred to stay on the sidelines’.

The dip of close to four per cent (3.8) has seen most fund houses registering a fall in the net inflows.

Gainers

But some of the mutual funds with large portfolio of assets under management such as ICICI Prudential, Reliance Mutual and HDFC Mutual showed a net increase.

The ICICI Prudential gained Rs 1,923 crore followed by Reliance Mutual Fund, which posted a rise of Rs 1,177 crore, while HDFC Mutual Fund showed a rise of Rs 718 crore last month.

These three fund houses account for roughly a third of the total assets under management in the industry.

Rise in assets

There was, however, a marginal increase in the assets managed by the industry when measured in terms of average daily balances. The value of assets under management rose marginally at Rs 7,415 crore. One manager with a leading fund house who preferred not to be identified thought the phenomenon could be due to inflow of funds from the banking industry for short durations of time last month.

The decline has been somewhat larger for funds with focus on gilt edged securities. According to fund managers, the change in call rate was the essential factor for the mutual fund industry to see major outflows.

“On the liquid funds side, lot of excess liquidity from institutions went out as the call rates moved up and the equity part more or less has remained flat,” said Mr Jaideep Bhattacharya, Chief Marketing Officer, UTI Mutual Fund.

But some fund managers believe that the volatility in the equity markets added to the investor sentiments of keeping away from mutual funds.

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