The Hindu Business Line : Reliance lifts asset base of mutual fund industry by 3%

Mumbai, March 4 The asset base of the Indian mutual fund industry increased by 3.17 per cent in February, chiefly because Reliance Mutual Fund, which reported a whopping 21.13 per cent increase in its assets under management (AUM).

The second and third largest fund houses, ICICI Prudential and UTI Mutual Fund reported a decline in their AUMs.

The Reliance fund house, saw its AUM rise from Rs 77,210.03 crore to Rs 93,531.67 crore. The total assets under management for the industry stood at Rs 5,65,469.53 crore as on February 29, 2008, against Rs 5,48,063.51 crore as on January 31, 2008, up by Rs 17406.02 crore, according to the data released by the Association of Mutual Funds in India (AMFI).

In the previous month, Reliance Mutual Fund had mopped up Rs 5,660 crore through Reliance Natural Resources Fund (RNRF), which mopped up the second largest fund collection by any new fund offer.

The units of the scheme were allotted in February, hence reflecting in the asset list for this month. Reliance Liquid plus too, did well, said analysts.

Choppy trade

Mr Vikrant Gugnani, CEO of Reliance Mutual Fund, said: “We have witnessed significant addition of new investors in our existing funds in the last two months, adding over 2.5 lakh investors in these volatile markets.” February was a month characterised by volatility and choppy trade in the markets.

Of the 32 mutual fund houses which reported figures for February, 15 registered a decrease in their asset bases during February. “There has not been much growth in the assets under management, especially in the equity segment because of choppy markets,” said Mr Sandesh Kirkire, Chief Executive Officer, Kotak Mahindra Asset Management Company.

Stock crash

The stock market crash of January 21, 2008 and the tight liquidity conditions had led investors to withdraw money from cash and cash plus plans during January.

“There has been depreciation in value of equity funds as the markets have come down over the month, so it basically shows that liquid funds have garnered more money in the last month as investors including bankers do park their surplus money in liquid funds”, said Mr Ramkumar K, Head-Fixed Income, Sundaram BNP Paribas Asset Management Company.

“Assets under management for the month of March are expected to shrink in size owing to the advance tax payments where in many investors and bankers withdraw their surplus money parked in liquid funds.”

New fund offers

“The marginal increase in the asset base can be attributed to flows into the new fund offers, increasing retail investor interest in mutual funds and in addition, the tax saving campaign which helped channel savings in the direction of mutual funds,” said Mr S Krishnakumar, Fund Manager & Head Research, Sundaram BNP Paribas Asset Management Company Ltd.

Although ICICI Prudential maintained its second position, its AUM saw a decline of 7.44 per cent, falling to Rs 59,277.65 crore from Rs 64,045.07 in January.

UTI Mutual Fund also continued to maintain its position but reported a marginal dip in its asset base, which fell to Rs 52,464.71 crore from Rs 52,656.19 crore in January.

HDFC Mutual Fund was another gainer in the top-five pack, increasing its asset base by 5.77 per cent during the month, to Rs 46,291.97 crore from Rs 43,762.69 crore in January. Birla Sun Life Mutual Fund showed a decline its assets under management by 3.41 per cent.

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