In November only around Rs 30,000 crore went out as compared with Rs 97,000 crore in October.

November is the beginning of a slow recovery but still we are 27 per cent down compared to a year ago and this is after 3-4 years that we are now showing negative growth. Otherwise we grew at the rate of around 50 per cent in the last 3-4 years.

Up to September of this year, the growth of AUM on a yearly basis was positive. But in October, for the first time the rate of increase has become negative. In October, we have declined by about 18 per cent on year-on-year basis and in November, the figure was 27 per cent. There is a negative year-on-year growth because of the heavy outflows in the past two months.

But there is a change as liquidity has started to come back into the system and with that the funds have started flowing in particularly in liquid and liquid plus schemes.

What is the current situation regarding the industry’s utilisation of the RBI liquidity window.

Overall mutual funds have borrowed something like Rs 28,000 crores as per the latest data. Most of this has been repaid. Till date only Rs 4,000 crore is outstanding. Today, hardly one fund is borrowing (at any point of time) and that too very small amounts, and those are being repaid quickly.

Is the industry still under redemption pressure?

All said and done, there are some things which are worth noting. In October, close to Rs 1 lakh crore had gone out of the industry but there was no crisis. Not a single fund house refused redemptions – all redemption requests were honoured, except for two funds where they only staggered it. This is thanks to the liquidity facility provided by the Reserve Bank and the commercial banks.

Another important thing to note is that the asset quality of mutual funds has been extremely good. Almost 92 per cent of the assets the mutual funds are holding are top grade.

Even the asset pricing has been adjusted to reflect the market realities and that has been done by rating agency Crisil.

As a result of all this, those who have invested in debt papers need not have any anxiety on any score.

Today, redemption pressure has also drastically come down.

Things have changed positively, money has started coming in, and confidence is building up, so in non-equity side, there is no anxiety.

How are the equity schemes doing currently?

In the equity side because of continuous fall in the market and extreme volatility, households (investments) are still not coming in.

Households are still out of the picture as they are waiting; because when they find the markets going down they think that it will go down further. Therefore, the volumes are down.

It might take a few more months before there is some reversal of trend. The sentiment is still bad, and everyday we get some negative news such as the export data and growth rate being down which adds to the negative sentiment.

What is your advice to investors?

If you are a long-term investor having a horizon of three years plus, this is the time to come in and to capture the markets.

People should come in and join the SIP route. They should invest every month if they can and remain invested for a period of three years and beyond.

Because when the scenario changes and the growth happens, the markets will go up.

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