In keeping with the quarter-end trend, mutual fund industry's assets under management fell by 10.3 per cent in December over November. Every quarter-end, the AUM under debt schemes witnesses a fall due to advance tax payments.

Most corporations and banks withdraw funds from mutual fund liquid schemes for advance tax payment purposes. “Every three months there is a decline in AUM. Therefore, there is nothing unusual about a 10 per cent drop,” said Mr Dhirendra Kumar, CEO, Value Research.

December AUM came down to Rs 6.11 lakh crore from Rs 6.81 lakh crore in the previous month. The decline was led by a 27 per cent fall in the liquid/ money market funds' AUM. All other fund categories fell by less than 10 per cent.

RBI's directive & after

Rising interest rates through the year had made this fund category extremely popular among institutional investors. However, following the RBI directive, this category also started witnessing a drop. The RBI had asked banks to reduce their exposure in mutual funds to 10 per cent of their networth.

However, some fund analysts said, not all banks initiated the process of withdrawal immediately. Some preferred to wait till the December deadline to reduce exposure.

Another popular fund category that witnessed a decline in the month of December was the gold ETFs. Gold Exchange Traded Funds saw their AUMs fall by around four per cent.

This was due to the fall in gold prices, said analysts adding that, this category still continues to be popular among investors. According to data given by Aditya Birla Money, of the total SIP monthly inflows, about 5-7 per cent is contributed by gold ETF SIPs.

Equity funds' AUM, in line with the equity markets, fell by 5.2 per cent, said fund analysts. The CNX Nifty during the same period eroded by 8.4 per cent.

>sneha.p@thehindu.co.in

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