Mutual funds (MFs) have lost a huge amount of asset value in the 12 months ending December 31, 2008. And, this loss is not because of redemptions, but due to the fall in the market value of their equity holding.
According to the data compiled by the Association of Mutual Funds in India (Amfi), though equity schemes received a net inflow of Rs 30,975 crore during the period, the assets under management (AUM) of these schemes declined by Rs 117,579 crore.
The data on MFs’ shareholding in Indian companies showed that the value depreciation has been huge. In good times, during April-December 2007, the funds made huge value appreciation of Rs 120,000 crore, while recording a net inflow of Rs 22,900 crore.
No wonder, equity schemes are losing sheen as their share in the total AUM has fallen with depreciation in the market value of shares held. The AUM of equity schemes increased 56 per cent between December 2006 and January 2008 to Rs 214,280 crore. But it has now fallen by 44 per cent to Rs 120,691 crore in January 2009.
At one point in December 2007 when the stock market was picking up, the debt-equity mix had reached 53:47.
Now, with the fall in equity prices, the composition has changed drastically during the period under review. It was 64:36 in March 2008, around 71:29 in June and September 2008 and 73:27 at the end of December 2008.
According to the Amfi data, redemption in equity schemes was seen only during the last four months when investors pulled out Rs 2,387 crore.
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However, debt and money market schemes go through redemptions at regular intervals as fixed maturity plans (FMPs) of various funds come up with redemptions every three, six and nine months.
If we take the data for equity schemes, the outflow due to redemptions is minuscule. Between December 2006 and January 2009, equity, balance, ELSS and ETF schemes together have seen net outflows only five times, and that is also less than Rs 1,000 crore. The rest of the times, these schemes have seen net inflows.
However, with the revival of the secondary capital market uncertain in the near future, equity scheme investors have started pulling out.
The pullout in the last four months is enough indication of that. On top of it, investors have also started avoiding equity schemes as the total sales in such schemes (both new as well as existing) have fallen 92 per cent from Rs 24,322 crore in January 2008 to Rs 2,061 crore at the end of January 2009.