The domestic mutual fund industry lost over 10 per cent of its assets during the financial year ended March 2011. Put together, the five leading fund houses alone saw assets dip by over seven per cent. Assets grew by 52 per cent last year.
According to the Association of Mutual Funds in India (Amfi), the industry’s average asset under management (AAUM) stood at Rs 6,58,914 crore (SBI MF did not declare its AUM till the copy was released), as against Rs 7, 47, 204 last year.
Industry experts say the primary reason for the dip could be outflows from the ultra-short-term funds after the mark-to-market norms were introduced in the middle of the last financial year. “Ultra-short-term funds comprised 40 per cent of the total assets of the industry. Outflows from this category hit assets,” said an industry analyst.
| ON A SLIDE Decline in assets of top fund houses in 2010-11 | ||
| Fund House | Assets as on 31-Mar | Change Y-o-Y (%) |
| Reliance MF | 1,01,576.60 | -8.00 |
| HDFC MF | 86,282.24 | -2.81 |
| ICICI MF | 73,466.10 | -9.29 |
| Birla Sun Life MF | 63,696.19 | -2.17 |
| UTI MF | 67,188.82 | -16.24 |
| * AAUM of SBI MF not declared All figures in Rs crore Source : Association of Mutual Funds in India (Amfi) | ||
The Securities and Exchange Board of India (Sebi) had mandated that debt securities with maturity of up to 182 days be valued at their weighted average market price from August 1 rather than the earlier practice of valuation on the basis of amortisation. Ultra-short term funds or liquid-plus schemes have a maturity of over 91 days. Liquid-plus funds were favoured by firms and banks as they generated annual returns of 5.5 per cent, while liquid schemes and banks’ short-term fixed deposits could give just 4.25 per cent.
Dhruva Chatterji, senior research analyst at Morningstar India, which tracks the mutual fund industry, said, “During February-December last year, the ten largest ultra-short term funds saw assets decline by 60-70 per cent. Many of these were managing assets in excess of Rs 30,000 crore in the initial part of last year.”
Almost half of the 43 players in the industry reported decline in assets. Among the top five players which control 70 per cent of the total assets, UTI MF was hit the hardest as its AAUM plunged over 16 per cent. ICICI MF witnessed a dip of over nine per cent, followed by Reliance MF(eight per cent). While HDFC’s assets were down three per cent, Birla Sun Life MF emerged as the only big fund house which man aged a rise of two per cent in FY11. Bowing to the demand of fund houses, Amfi had stopped declaration of AUM on a monthly basis. According to them, monthly data was brewing unhealthy competition among fund houses to gather assets. Effective from the second half of FY11, AUM numbers are now declared at the end of every quarter.