Redemptions take sheen off MFs

Redemptions owing to year-end pressures have offset most of the gains accrued by mutual funds on account of the rising market and funds mobilised via initial public offerings in March.

Total assets under management (AUM) of the industry fell by 2.41 per cent (Rs 3,705 crore) from Rs 1,53,520.63 crore at the end of February to Rs 1,49,815.62 crore in March. Only eight out of 29 mutual funds managed to record some gains, according to data on the Association of Mutual Funds of India (AMFI) website.

Hemant Rustagi, CEO at Wiseinvest Investment Advisors said, "The fund industry faces redemption pressures, specially from corporates every March on account of year-end requirements."

Market entities added that corporates and big investors usually redeem their MF units to book profits, for tax payouts and also because they do not want to show MF investments in their balance sheets in some cases.

Standard Chartered Mutual Fund reported the biggest loss in relative terms, its AUM falling by more than 23 per cent (Rs 2056.55 crore) from Rs 8,832.44 crore in February to Rs 6,775.89 crore in March, while JM Financial Mutual Fund reported the biggest gain, adding more than 34 per cent (Rs 1034.89 crore) of AUM up from Rs 3,026.14 crore in February to Rs 4,061.04 crore in March.

Reliance Mutual Fund added 12.23 per cent (Rs 1039.98 crore) of AUM, up from Rs 8,502.66 crore to Rs 9542.64 crore and SBI Mutual Fund gained 6.96 per cent (Rs 428.96 crore) in AUM from Rs 6,166.32 crore to Rs 6,595.28 crore.

Despite a string of IPOs, the mutual fund industry has not managed to add any significant AUM as redemption pressures in older schemes has played spoilsport, analysts said. The fund insustry has also failed to market old schemes, they added.

Heavyweights HDFC Mutual Fund added 2.99 per cent AUM up from Rs 14,574.68 crore to Rs 15,009.83 crore, Franklin Templeton Mutual Fund AUM was up by 2.25 per cent from Rs 15,015.90 crore to Rs 15,353.61 crore and Birla Sun Life Mutual Fund AUM grew by 1.76 per cent (Rs 179.60 crore) from Rs 10,193.69 crore to Rs 10,373.29 crore.

Significantly, smaller-sized funds have seen a larger relative fall in their AUMs, analysts pointed out. Sahara Mutual Fund saw its AUM fall by 22.45 per cent from Rs 308.10 crore to Rs 238.93 crore, BOB Mutual Fund AUM fell by 19.41 per cent from Rs 179.76 crore to Rs 144.87 crore, Sundaram Mutual Fund AUM was down by 17.32 per cent from Rs 2245.03 crore to Rs 1856.17 crore and ABN AMRO Mutual Fund AUM fell by 16.10 per cent from Rs 1100.09 crore to Rs 923 crore.

The largest fund in the country, UTI Mutual Fund reported a small loss of 0.46 per cent (Rs 96.25 crore) from Rs 20,835.83 crore in February to Rs 20,739.57 crore in March while the other heavyweight Pru ICICI Mutual Fund saw its AUM fall by 6.23 per cent from Rs 16,314.96 crore to Rs 15,298.28 crore.