Funds see Rs 10,000 cr redemptions in June

Mutual funds, which did not see panic redemptions even in May when the stock markets went into a tailspin, are now being hit by redemptions.

Assets under management (AUMs) of the mutual fund industry have shrunk by over Rs 10,000 crore in June, according to data from the Association of Mutual Funds in India.

In fact, in May, when the markets crashed by over 14 per cent, AUMs of mutual fund houses grew by Rs 19,121.9 crore. Fund managers attributed this to the tendency of investors entering the markets to take advantage of lower net asset values.

However, with the markets showing no signs of re-testing their highs, investors have chosen to book profits and find safer avenues to park their money in. The Sensex, however, has clawed up by over 3 per cent in the last six weeks.

Asset management companies are not too perturbed by this 3.65 per cent shrinkage in their assets. "We were anticipating a loss of up to 5 per cent in corpus because of redemptions. The fact that investors are booking profits on their investments is a sign of a good, matured market. However, there is no panic and no real redemption pressure that fund houses are facing now," said the head of marketing of a mutual fund house.

The loss of assets, in June, is across all categories of funds "� not limited to equity funds alone. About 20 per cent of the loss reflected in June's AUMs is attributable to equity funds, according to transaction figures of mutual funds published by the capital market regulator.

The larger chunk of this loss is in cash funds and debt products. Fund houses say corporate money tends to move out in June, as companies make advance tax payments.

"This (the loss in AUM) may primarily be due to the equity market meltdown in June, coupled with large outflows from fixed income schemes owing to rising interest rates, increased advance tax payments and bank redemptions at the quarter end," said Sameer Kamdar, national head - mutual funds, Mata Securities.

Prudential ICICI AMC, which overtook UTI AMC in May, has held on to its lead by a small margin. The former closed the month with AUM of Rs 30,142.61 crore, while UTI AMC's assets stood at Rs 30,115.31 crore. Reliance Mutual Fund managed Rs 26,314.44 crore AMU in June.