Assets with MFs leap 8.17% in July

Our Bureau Mumbai | Updated on August 09, 2011 Published on August 09, 2011


Diversion from equity to liquid schemes seen as reason

The mutual fund industry's assets surged by 8.17 per cent to Rs 7.28 lakh crore in July. The total assets under management of the mutual fund industry stood at Rs 6.73 lakh crore as on June 2011.

The rise in assets was led mainly by a sharp increase of 26.5 per cent in the liquid/money market funds. The assets under management for these funds stood at Rs 1.8 lakh crore, up from Rs 1.42 lakh crore in June.

“As equity markets are performing badly, the liquid schemes have become more attractive because of the high yields. A lot of money has found its way into these schemes,” said Mr Deepak Chatterjee, Managing Director, SBI Mutual Fund.

This increase is in spite of the RBI guidelines issued in April of this year asking banks to reduce their exposure to mutual funds.

After implementation of the guideline, the industry AUM was expected to have reduced by around Rs 40,000 -50,000 crore, fund analysts had said.

However, with the deadline for the withdrawal of these funds being extended from October 2011 to December 2011, the decline in AUM is expected to be gradual and smooth.

However, fund analysts are quick to point out that not all fund houses will be affected by this regulation. Only those fund houses which have a higher exposure to banks' money will be affected, while others may still have headroom for more of these funds, they said.

The equity schemes continued to witness a decline, with the AUM under these schemes coming down by 1.18 per cent. The equity AUM has declined from Rs 1.68 lakh crore to Rs 1.66 lakh crore in the last one month period. But fund managers and distributors say that the drop is mostly due to reduction in asset value. “We are not seeing redemptions at this point. Inflows are trickling in, though not in significant amounts. So, the drop is mostly due to asset value drop,” said Mr Gopal Agrawal, Chief Investment Officer & Head-Equity, Mirae Asset Global Investments (India).

Exchange-traded funds, excluding gold ETFs, were the second best performing fund category for the month of July, with an increase of 16.3 per cent in their AUM. Gold ETFs saw an almost 10 per cent growth in AUM.

Published on August 09, 2011
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