The Hindu Business Line : How fund house assets moved

As stock markets went into a free fall October, only the liquid funds of the top 10 fund houses have seen their assets swell, and quite significantly.

Over the month of October, diversified equity funds of these fund houses have seen a decline in their assets of between 12 and 25 per cent with Kotak Mahindra’s assets, in this group, falling the least and SBI the most. Declines were mostly caused by eroding NAVs. The large-cap focus among these funds and higher cash positions may have ensured that they didn’t lag significantly behind benchmarks such as the Sensex and the Nifty.

Interestingly, assets of sector funds have also fallen along the lines of the broader market, between 13 and 25 per cent. Though such funds usually bear the brunt of a market fall, large sized schemes such as Reliance Diversified Power Sector, DSP BR TIGER and ICICI Pru Infrastructure have actually seen smaller declines in their assets than the broader markets. The high cash positions in the portfolio (to the extent of 30 per cent, in some cases) might have saved the day for such funds.

The tax funds category though, saw a different fate. These funds registered asset declines of anywhere between 11 (Tata) and 39 per cent (Reliance) during the October month.

Several of these tax funds invest substantial part of their portfolio in mid-cap stocks. These have been hit quite hard last month, with the BSE Mid-cap Index falling by 33.3 per cent. This would explain the steep fall in the assets under management of such funds.

All fund houses have seen depletion in their AUMs as far as bond funds are concerned, as redemptions from the close end FMPs contributed to the fall. Liquid funds have had a mixed bag in October. Seven of the top ten funds saw their assets swell.

SBI’s AUM increased by a big 115 per cent in that month. Most liquid funds cater to institutional investors. This may be viewed as a safer move to a trusted name for parking cash surpluses. UTI, Reliance and Tata also saw AUMs expand by 25-35 per cent. Kotak Mahindra and DSP BR saw their liquid fund AUMs deplete by over 35 per cent.