The Hindu Business Line : Mutual fund assets take a 3.3% dip in November

After logging monthly increases in September and October, assets under the management (AUM) of mutual funds have gone down by 3.3 per cent as of end November.

The figure for the month stands at Rs 5,37,943 crore, a decline of Rs 18,786 crore from October’s AUM of Rs 5,56,729 crore.

The decline was widespread with 22 out of 32 fund houses registering a decrease in their portfolio in November. Fund managers attribute the decline to a combination of liquidity crunch for bank and corporate investors and a mega IPO last month sucking out additional funds.

“It is the ‘debt fund’ AUMs that have come down. The redemptions are mainly from corporates and banks as they adjust to the liquidity crunch,” said Mr R. Rajagopal, Chief Investment Officer, DBS Cholamandalam Mutual Fund.

“There were IPOs like Mundra Port this month, which had investors withdrawing substantial amounts of money out of mutual funds and investing in these new IPOs,” said Mr A. Balasubramaniam, Chief Investment Officer, Birla Sun Life Mutual Fund.

“Most of the money that has come in is in liquid schemes,” Mr Rajagopal added.

Reliance Mutual Fund and ICICI Prudential Mutual Fund continue to lead the pack as funds with the largest corpus of assets under management. But even they could not escape the phenomenon of asset decline. The two funds now manage AUMs of Rs 77,764 crore and Rs 54,903 crore respectively.

UTI Mutual Fund, which occupies the third slot, managed to post a small increase. JM Financial Mutual Fund’s asset base increased by 31 per cent albeit on a relatively smaller base.

Festive needs

“November was a festive season owing to which lot of retail investors tend to withdraw money from mutual funds for their needs,” said a fund manager.

Explaining the composition of the flows during the month, Mr Balasubramaniam said, “The money that has come in is through liquid schemes, while the growth and income schemes did moderately well”.

“The institutional investors not only withdraw from mutual funds to meet their liquidity needs but also seem to book profits,” said Mr Paras Adenwala, Chief Investment Officer, ING Vysya Mutual Fund.

“The performance of the liquid funds depends on the fluctuating interest rates,” he added.

The mutual funds that have registered an increase in their asset base include Merill Lynch Mutual Fund by 7 per cent, Tata Mutual Fund 6 per cent, ING Vysya Mutual Fund 4.6 per cent and Taurus Mutual Fund 4 per cent.