The Hindu Business Line : Mutual funds’ asset base slips 2.8% in September

Mumbai, Oct. 3 Mutual funds could not sustain the marginal growth in assets in August and recorded a decline of 2.76 per cent in assets under management (AUM) during September. AUM by mutual funds had declined in June and July this year.

Funds customarily register flat growth in September, a month of advance tax payments, noted an analyst.

Tight times

This is the period when inflows into equity are generally tight as the banking sector has to redeem its funds on account of balance sheet concerns at quarter end, said Mr Ritesh Jain, Head of Fixed Income, Principal PNB Mutual Fund.

Most corporations also redeem their money to meet their advance tax liabilities, he said.

In September, liquid schemes recorded net outflows even as there was sizable money coming into them, said analysts.

Bets on FMPs

Fixed maturity plans continue to attract a substantial amount of investments, said the Chief Investment Officer of a mutual fund house.

“Investors are shifting from the uncertainty (returns) of equity to the so-called certain returns of the FMPs,” said Mr Devendra Nevgi, CEO & CIO of Quantum Mutual Fund.

The high interest rate scenario is making FMPs a more attractive option, he added.

All the top five mutual fund houses registered declines in their assets under management in September.

Losers in top

While Reliance Mutual Fund recorded a 2.4 per cent dip in asset base, HDFC Mutual Fund, which had overtaken ICICI Prudential at number two position last month, registered a 3.5 per cent dip in asset base. ICICI’s asset base fell 6.3 per cent.

UTI Mutual Fund’s AUM dipped 5 per cent. While 20 out of 36 mutual fund houses reported a decrease in their AUMs, 14 of them registered an increase in their AUMs.

The assets under management of the mutual fund industry now stand at Rs 5,29,121.75 crore against Rs 5,44,173.95 crore at end of August.

The benchmark index, Sensex, has fallen by more than 11 per cent during September, while Nifty was down by 10 per cent for the same period.

New schemes

September saw the launch of three equity-oriented schemes, including the Commodity Equities Fund which was launched by Birla Sun Life Mutual Fund. The other two were Bharti Axa Equity Fund and Principal Emerging Bluechip Fund.

Goldman Sachs Asset Management Company (India), a subsidiary of the Goldman Sachs Group, was granted approval in September by the Securities and Exchange Board of India to start a wholly-owned asset management and mutual fund business.