The equity asset of almost all the mutual fund schemes tumbled in February on the back of turbulence in the market even while the top two fund houses, SBI MF and ICICI MF, recorded the lowest decline of 1.1 per cent, largely due to their high cash holding of 10 per cent and 9 per cent, as per data of Motilal Oswal monthly Fund Folio, an analysis of the mutual fund industry.
SBI MF and ICICI MF equity AUM fell 1.1 per cent month-on-month in February to ₹3,670 crore and ₹2,087 crore while that of HDFC MF and Nippon India MF were down 5 per cent and 3 per cent in the same period to ₹1,802 crore and ₹1,426 crore.
The cash holding of HDFC MF and Nippon India were 3.6 per cent and 3.2 per cent.
While most mutual fund houses have suggested that the market valuations were high, they had to deploy the funds collected in order to deliver benchmark-beating returns.
Among the top 20 mutual funds, L&T MF, IDFC MF and Motilal Oswal MF have recorded more than 6 per cent fall in their equity asset under management to ₹394 crore, ₹258 crore and ₹193 crore, respectively.
Cash holding was derived by deducting equity AUM from total AUM and only equity growth schemes have been considered for cash, said Motilal Oswal's Fund Folio.
‘Investment prospects intact’
A Balasubramanian, Managing Director, Aditya Birla Sun Life AMC said the long-term investment prospects of India growth still hold, given the Government-focused approach across sectors.
Though the run-up in crude oil prices remains a concern, it will cool down once the Russia-Ukraine conflict is settled, he added.
Total equity assets of mutual funds were down 3 per cent to ₹18,481 crore.
The large part of the fall in equity asset was due to mark-to-market losses and will recoup once the markets bounce back.
The benchmark Nifty was down 3 per cent month-on-month in February as the market turned jittery over the ramifications of the Russian war on Ukraine.
However, investors continued to repose their faith in equity schemes, with their investments in February increasing 3 per cent m-on-m to ₹40,500 crore.
A meaningful decline of 23 per cent in redemptions at ₹15,100 crore led net inflow to increase 30 per cent to ₹25,400 crore in February against ₹19,500 crore logged in January.
The sharp market fall was largely due to pull-out of investment by foreign portfolio investors amid talks of a rate raise by the US Fed.