Fund assets erode as markets see-saw

AUM down by Rs 2000 crore on a month-on-month basis

A volatile equity market and the downturn in the debt markets did not help the mutual fund industry, which is struggling in vain to retain assets, last month.

Also, despite a slew of initial public offerings (IPOs) from mutual fund houses in August, the mutual fund industry's assets under management (AUM) fell over Rs 2,000 crore on a month-on-month basis.

The total AUM of 25 mutual funds fell by Rs 2,047 crore to Rs 1,55,283 crore on August 31 from Rs 1,57,330 crore on July 31.

Ravi Mehrotra, president, India, Franklin Templeton AMC, said, "We have witnessed inflows into our equity, fund of funds and floating rate funds during the month, which reflect the changing investor needs in the current market conditions. We have seen increased inflows into our flagship equity funds given our focused efforts to promote systematic investments as well as reasonably attractive equity valuations. On the other hand, the uncertainty in the debt markets owing to the interest rate outlook has resulted in a shift in allocations towards floating rate and liquid funds, as investors look for a hedge during volatile times."

A senior fund manager at UTI Mutual Fund said, "The equity market has risen considerably and profit booking was seen, considering that we have almost invested 48 per cent of our AUM in equity."

He said UTI Mutual Fund also paid out dividends and no new funds were launched in August. Among the biggest losers in the month was the UTI Mutual Fund with a loss of nearly Rs 1,400 crore (6.38 per cent) in AUM.

As many as 14 out of 25 mutual fund houses reported losses in net AUM. Of the 11 fund houses which showed net gains, only five witnessed a triple-digit net accretion in AUM.

Tata Mutual Fund emerged as the largest gainer among all mutual funds during August, with a net gain of Rs 816 crore, resulting in a net AUM of Rs 6,298 crore on August 31.

Industry sources partly attributed the gains to the fund's IPO in a floater scheme during the month.

Franklin Templeton was the second largest gainer with an increase of Rs 633 crore in its net assets to Rs 18,332 crore despite the absence of any IPO from the fund.

Standard Chartered Mutual Fund added Rs 187 crore to its AUM and Reliance Mutual Fund added Rs 150 crore to have a net AUM of Rs 11,570 crore, but it garnered funds from its Floater IPO, said marketmen.

Apart from UTI MF, other losers were SBI Mutual Fund with a net AUM loss of Rs 551 crore (8.93 per cent) and DSP Merrill Lynch Mutual Fund, whose net AUM fell by Rs 430 crore (6.80 per cent).