The average assets under management (AAUM) of domestic mutual funds declined in November for a successive month. Continuous redemption pressure is not letting fund houses garner assets, despite a robust inflow of fresh money.
Data from the Securities and Exchange Board of India (Sebi) show the industry’s AAUM dipped 3.7 per cent in November to Rs 6,73,186.3 crore, compared with Rs 6,98,852.7 crore in the previous month. This is in contrast to what was seen in the same period last year, when the industry continued to increase AAUM, which stood above Rs 8 lakh crore in November last year.
“It is true the industry is getting fresh money, but that does not mean redemptions have stopped. There is no change in investors’ mindset and they are still redeeming their funds,” said the chief investment officer (CIO) of a mid-sized fund house.
“In holiday season, investors, in particular foreign investors, tend to redeem their money. It appears it has got slightly preponed this year,” said the head of fixed income at another fund house. He said schemes in the liquid and money market segment were witnessing the highest redemption pressure.
| SHRINKING ASSETS AAUM in different asset classes as on November 30 | |
| Category | AAUM (Rs crore) |
| Income/ debt-oriented | 435,920.16 |
| Equity-oriented | 210,240.56 |
| Balanced funds | 19,395.72 |
| Exchange- traded funds | 5,068.81 |
| Fund-of-funds investing overseas | 2,561.04 |
| Total | 673,186.29 |
| Source : Sebi | |
In the current quarter so far, the industry’s assets have declined by close to six per cent, or a little over Rs 40,000 crore. In October, the decline was two per cent. “The poor performance during the initial months of the quarter is likely to put pressure on the industry,” said the CIO of a mid-sized fund house. He added that December, being the last month of the quarter, was likely to bring a further decline in assets due to the quarter-end phenomenon, when banks and companies pull out funds.
According to equity fund managers, corrections in equity markets over recent weeks have brought fresh investors to the fund market. “However, redemptions are going on unabated, as investors are booking profits,” said the chief executive officer of one of the top five fund houses.
