Mutual fund (MF) redemptions, which had eased during October and November of the current financial year, rose again in December. Redemptions touched Rs 14,753 crore during the month, the second highest thus far this year after September last year. However, the Unit Trust of India's (UTI) share has been negligible compared to other funds.
In September 2001, redemptions and repurchases were a record Rs 16,000 plus crore as investors rushed to liquidate their holdings or switch over from equity to other schemes.
Some fund managers attribute the rise in redemption to the rush by investors and corporates to meet their year-end tax obligations. "With the financial year drawing to a close, large investors are redeeming their investments for advance tax payment," a mutual fund sales executive said.
Redemptions started out at Rs 5,859 crore in April then rose to Rs 6700 crore in the following month, suddenly jumping to over Rs 9400 crore in June, crossing Rs 10,000 crore in July. In July, there was a marginal dip in redemptions to Rs 9400 levels before it rose again in September. In October, however, it was down to over Rs 10,000 crore, while the following month's redemptions went even lower than the August levels.
Fund managers expected redemptions to increase during the last three months of the current fiscal. "It is not only year-end redemptions but this time there has been a lot of money put into liquid schemes - and these will typically see huge redemptions at any point of time," a fund manager said.
Except for May and June, the bulk of the redemptions was accounted for by mutual funds other than the UTI. In fact, UTI's redemptions have always ranged between 2 per cent and 12 per cent of the total redemptions, except in May when the redemtions were as huge as 35 per cent of total redemptions at Rs 2,302 crore.
Redemptions at UTI has ranged from a low as Rs 276 crore in November to a high of Rs 1,095 crore in October during the current fiscal. This is hardly 2 per cent of the total redemption of Rs 9,481crore in November and 12 per cent of Rs 10,938 crore in October, respectively.
