Reliance Mutual Fund has continued to face heavy asset erosion for the second consecutive quarter during the October-December period. At a time when the industry lost 4.5 per cent of assets, Reliance MF lost two times more at over nine per cent. In the previous quarter, Reliance had lost over 10 per cent of its assets.
One of the top officials in Reliance MF had earlier told Business Standard that fund outflow was primarily from the liquid funds where banks had their investments.
So far in the current financial year (April-December), the overall industry’s average AUM has declined three per cent or Rs 19,821 crore. During the same period, Reliance alone witnessed a erosion of 19 per cent of its assets, amounting to a whopping Rs 19,271 crore — slightly less than what industry lost in absolute term.
The fund house, which HDFC MF dethroned from top slot in September quarter, could not make a comeback in the December quarter. Rather, the gap in assets under management between the top two fund giants only widened further to over Rs 6,000 crore.
According to the latest statistics from the Association of Mutual Funds in India (Amfi), HDFC MF continued to lead the industry with an average asset under management (AUM) of Rs 88,628 crore while Reliance's stood at Rs 82,305 crore. (see table)
Uncertain equity markets, a quarter-end phenomenon which makes financial institutions and companies redeem from liquid schemes for meeting advance tax requirement took a toll on industry's assets.
Moreover, industry experts say, Reserve Bank of India's move to restrict banks' investment in liquid funds to 10 per cent of their networth also played an important factor.
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All top five fund houses lost assets. HDFC MF performed relatively better as its assets slipped 3.5 per cent, while those of ICICI Prudential, Birla Sun Life and UTI declined between six and eight per cent.
According to independent mutual fund analysts HDFC MF continues to be a beneficiary because of the rise in its equity assets. Comparing the schemes' performance of Reliance and HDFC, a senior research analyst at a fund tracker firm, says, “Flagship schemes of HDFC have been doing well. However, some of the schemes of Reliance MF have done badly in recent times.”
Currently, there are 43 players in the fund industry managing an average AUM of Rs 6.8 lakh crore.