Mutual fund AUMs dip for first time in two years

Assets under management (AUMs) of mutual funds have declined by Rs 827.2 crore or 0.15 per cent as on January 31, in comparison with AUMs in December 31, 2007, after a severe liquidity crunch in the markets forced banks and corporate bodies to withdraw money from liquid funds.

This is the first time in the last two years that AUMs have actually fallen.

The total AUMs stand at Rs 549114.82 crore as of January 31, down from Rs 549942.02 crore as on December 31, according to data released by the Association of Mutual Funds of India (AMFI).

Anil Ambani-promoted Reliance Mutual Fund saw a decline in AUMs but managed to retain the top position with Rs 77210.03 crore. ICICI Prudential mutual fund has regained its second position with AUMs of Rs 64045.07 crore.

UTI mutual fund slipped to third position with AUMs of Rs 52656.19 crore. HDFC mutual fund (Rs 43762.69 crore) and Birla Sun Life mutual fund (Rs 35931.35 crore) are in the fourth and fifth positions with respect to AUMs.

Fund managers pointed out that the severe liquidity crunch in the market led to banks and corporate houses withdrawing money from liquid funds.

"Liquid funds did see some redemption pressures from banks. The interbank call rate continued to remain higher at 7-7.5 per cent since liquidity was tight last week," pointed out a fixed income fund manager, who did not wish to be identified.

Equity funds, in comparison, have seen a smaller degree of erosion in their AUMs with some funds even seeing fresh inflows.

The Bombay Stock Exchange benchmark index, Sensex has fallen by 7.17 per cent till January 31 since the Reliance Power IPO closed on January 18.

Around 11 new fund offerings are currently open, that could also be hit as a result of the volatile markets.

In November 2007 also, AUMs had fallen by 3.49 per cent because of withdrawal of funds by banks after call money rates touched 7 to 7.5 per cent.

However, last month, funds had seen net inflows despite it being advance tax payment month as the mutual fund industry's collective AUMs rose by 2.25 per cent.