The mutual fund industry has witnessed a value erosion of Rs 75,966 crore in equity-related schemes in the first seven months of the current financial year. This is primarily because of the slide in the equity market on account of the global financial turmoil.
According to the Association of Mutual Funds of India (Amfi) data, a major part of the value erosion, Rs 40,608 crore, has taken place in the month of October 2008 as the BSE Sensex and BSE-500 index recorded the biggest ever single-month decline of a 23.9 per cent and 27.1 per cent respectively in that month.
However, when markets were zooming in October last year, the market value of these funds had risen by a whopping Rs 80,984 crore.
In the first seven months of 2008-09, the Sensex has declined by 37.4 per cent and the BSE-500 index 42.02 per cent. In the first seven months of 2007-08, the Sensex and the BSE-500 index had gone up by 51.8 per cent and 57.1 per cent respectively.
The Amfi data also show that the mutual funds’ assets under management (AUM) in equity-related schemes has declined from Rs 189,025 crore as on March 31, 2008 to Rs 157,913 crore as on October 31, 2008. The fall is despite net inflows of Rs 4,246 crore in new as well as existing schemes.
According to the unaudited half-yearly financial data for September 2008, published by 29 fund houses, the total reserves of the equity schemes have declined by Rs 28,903 crore from Rs 75,059 crore in March 2008 to Rs 46,155 crore at the end of September 2008.
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However, the fund houses faced very limited pressure on redemption as the total unit capital of these 29 mutual funds in equity schemes has declined by only Rs 1,947 crore from Rs 110,030 crore.
| VANISHING NUMBERS | ||||||
| (Rs cr) Mutual Fund | Reserves & Surplus as on | Unit Capital as on | ||||
| Mar’08 | Sep'08 | Chg | Mar'08 | Sep'08 | Chg | |
| Reliance | 14,696 | 10,338 | -4,358 | 16,883 | 16,707 | -176 |
| ICICI Prudential | 6,193 | 2,859 | -3,334 | 10,680 | 9,202 | -1,478 |
| HDFC | 10,606 | 9,060 | -1,545 | 7,441 | 7,392 | -48 |
| Tata | 2,586 | 1,218 | -1,369 | 3,950 | 3,857 | -94 |
| Birla Sun Life | 3,225 | 1,900 | -1,325 | 4,222 | 4,185 | -37 |
| JM Financial | 512 | -717 | -1,229 | 4,088 | 3,802 | -286 |
| Fidelity | 1,891 | 851 | -1,040 | 5,309 | 4,993 | -316 |
| HSBC | 1,465 | 785 | -680 | 2,507 | 2,469 | -37 |
| Kotak | 1,061 | 391 | -670 | 3,614 | 3,459 | -154 |
| IDFC | 876 | 423 | -453 | 2,683 | 2,364 | -319 |
| LIC | 8 | -272 | -280 | 1,611 | 1,588 | -23 |
Except for Benchmark Mutual Fund (Rs 1 crore) and Deutsche Mutual Fund (Rs 57 crore), all the remaining 27 fund houses have reported a decline in their reserves and surplus during the first half. The reserves and surplus accounts of JM Financials, JP Morgan, AIG, LIC, Lotus, Fortis (formerly ABN Amro) and DBS Chola Mutual Fund have, in fact, turned negative.
Twelve fund houses have reported a decline of over Rs 1,000 crore in reserves and surplus, while nine others have posted a fall between Rs 100 crore and Rs 1,000 crore. Prominent among the 12 mutual funds that have registered a decline of over Rs 1,000 crore are Reliance Mutual Fund (Rs 4,358 crore), UTI Mutual Fund (Rs 3,758 crore), ICICI Prudential Mutual Fund (Rs 3,334 crore), SBI Mutual Fund (Rs 2,992 crore) and Franklin Templeton Mutual Fund (Rs 2,259 crore). The remaining six fund houses have reported a fall of below Rs 100 crore in reserves and surplus.