Market rout: Mutual funds’ equity assets halve in March

PALAK SHAH Mumbai | Updated on April 06, 2020

2020 could be the first year of AUM contraction after six years

The brutal stock market crash in March has halved assets under management (AUM) of equity mutual funds (MFs) from the high point of this January.

The AUM of open ended equity mutual fund schemes witnessed a 44 per cent fall to ₹5.37-lakh crore in March from over ₹7.74-lakh crore in January, AMFI data shows.

The assets under management for closed ended equity schemes has crashed by 43 per cent to ₹23,679 crore in March from ₹33,945 crore in January.

Impact of the fall

The Sensex and Nifty crashed by nearly 30 per cent from their peak but the fall in individual stock prices has been severe. Total equity related assets under management stood at ₹9-lakh crore at the end of 2019 but the same stood at ₹5.6-lakh crore in March.

If the mutual fund AUM does not rise above ₹9-lakh crore by the end of 2020, it will be the first year of contraction for MF equity assets in India in six years. For the past six years, the AUM was growing at an average rate of 23 per cent annually, recent data from financial services company Motilal Oswal showed.

On the back of this rise in the assets under management of mutual funds, the holding of domestic institutional investors in BSE 500 companies had reached a record 14.4 per cent in 2019.



Limited redemption

Even though the markets have taken a beating, the mutual fund industry is yet to see any significant redemptions.

Fund managers are of the view that investors will not rush to withdraw money now, since the value they would get may be too low, and will instead wait till the year end to redeem.

Open ended large-cap equity schemes, which had the highest assets under management of more than ₹1.57-lakh crore in January, have seen a steep fall of 47 per cent in assets.

The AUM off large-cap funds stood at over ₹1.06-lakh crore in March.

Small-cap funds (open ended) have seen AUM erosion of 49 per cent from over ₹50,423 crore to ₹33,756 crore.

Published on April 06, 2020

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