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Sharvari Patwa

Mumbai, Aug. 2 The assets under management (AUM) of mutual fund industry fell for the second successive month, declining by more than 6 per cent in July.

During the month, the 50-stock Nifty gained 7.2 per cent and the Sensex gained 6.6 per cent. Though the indices rose, it was the stock market volatility that mutual funds found difficult to manage, leading to the fall in AUM, said analysts. There has been a considerable drop in investments in mutual funds, though some fresh investments are coming into debt schemes.

The mutual fund industry now manages assets of Rs 5,29,340.68 crore as on July end compared to Rs 5,64,752.75 crore in June.

The asset base of the top four funds registered a drop this month, with the leader, Reliance Mutual Fund, recording a dip of 6.9 per cent in asset base. ICICI Prudential Mutual Fund recorded a drop of 7.25 per cent in asset base, while HDFC Mutual Fund’s AUM fell 3.7 per cent and UTI Mutual Fund by 9.2 per cent.

Out of the 35 mutual fund houses, 23 have recorded a drop in their asset bases, while nine mutual fund houses registered an increase in AUM.

In July, mutual fund houses were net buyers of equity for Rs 1,412.20 crore, 55 per cent less than in June, while they bought debt to the tune of Rs 5,788.90 crore, 77 per cent higher from June.

“Fresh investments have almost halved compared to November-December and as investor sentiment is comparatively low for some time now. Most investors are adopting a ‘wait and watch’ policy”, said Mr K. Venkitesh, national head of distribution, Geojit Financial Services.

Though the debt schemes are not making much money, investors are parking their cash in them as they are keen on protecting their capital, said Mr Arindam Ghosh, chief executive officer of Mirae Asset Global Investment Management, India.

There is not much redemption pressure and investors are shifting to staggered and systematic investment schemes in such market conditions, added Mr Ghosh.

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