But, MFs turn net buyers of shares in December after 6 months.
Tight liquidity and continuous outflow of funds hit the average assets under management (AAUM) of the domestic fund market during the December quarter.
According to the Association of Mutual Funds in India (Amfi) data, industry’s AAUM has dipped 5.31 per cent sequentially to Rs 6,75,376.97 crore as on December 31, 2010. In September 2010, the industry’s assets stood at Rs 7,13,281 crore.
Interestingly, in the previous quarter, AAUM had constantly risen between July and September after a fall of over 15 per cent in June due to auctions for 3G and broadband wireless access spectrums.
All the top five fund players lost assets in the December 2010 quarter. Birla Sun Life MF was hit the hardest, with the fund house losing over 14.43 per cent, while Reliance MF, HDFC MF and ICICI Prudential MF lost over five per cent. UTI MF performed slightly better, with assets declining 3.3 per cent.
According to an independent mutual fund expert, industry lost more of its assets from the short-term and liquid plus funds. “Birla MF, in particular, has a big chunk of assets in its short-term funds,” he added. Though category-wise statistics is likely to be released later this week, fund managers said quarter-end phenomena hit the industry again, despite the industry witnessing positive inflows in November.
| LOSING CASH AAUM of top five fund houses | |||
| Fund house | Sept 30, ’10 | Dec 31, ’10 | % change |
| Reliance MF | 1,07,749 | 1,02,066 | -5.27 |
| HDFC MF | 93,106 | 87,883 | -5.61 |
| ICICI Pru MF | 69,728 | 65,841 | -5.57 |
| UTI MF | 67,618 | 65,387 | -3.3 |
| Birla Sun Life MF | 67,421 | 57,689 | -14.43 |
| All figures in Rs crore; Source: Amfi | |||
Chief executive officer of a large-sized fund house, said, “Liquidity remained tight this quarter. Moreover, there was no relief from outflows, except a slight aberration in November. These two factors had its impact on the assets of the industry.”
According to a fund manager in a mid-sized fund house, "As anticipated, corporates have pulled out funds for their advance tax while banks too have taken the funds out."
As per the data compiled by the Business Standard Research Bureau, out of the 42 players in the fund market, only 10 could manage to add fresh assets in their kitty. These players include Benchmark MF, Axis MF, Mirae Assets and Sundaram MF, among others.
Fund players had been demanding for restriction on assets publication on a monthly basis. According to them monthly data was putting undue pressure on fund houses for garnering assets resulting into unhealthy competition. Amfi decided to publish asset data on a quarterly basis from December quarter onwards.
Industry experts termed 2010 as a redemption year for mutual funds. “Industry could not add assets rather there was a de-growth,” said the independent expert.
On a year-on-year basis, the AAUM in December, 2010 dipped 15 per cent from Rs 7,94,300 crore in the December, 2009.
Mutual funds turn net buyers of shares
NewsWire18 adds: Mutual funds, snapping a six-month selling trend, turned net buyers in December, net buying shares worth Rs 1,376 crore, and fixed income securities worth Rs 47,990 crore, according to data released by the Securities and Exchange Board of India.
In November, fund houses had net sold shares worth Rs 100 crore, and bought debt papers worth Rs 15,182 crore.
In 2010, domestic mutual funds had net bought equities only in May, net buying shares worth Rs 98.6 crore.
The Bombay Stock Exchange’s 30-share Sensex rose 5.06 per cent and the National Stock Exchange’s 50-share Nifty went up 4.63 per cent in December.
In December, of the 22 trading days, fund houses were net buyers of equities on 13 days. December 10 saw the maximum daily net investments of Rs 406 crore, followed by Rs 362 crore on December 21.
The highest daily net sales amounting to Rs 379 crore was made on December 7, followed by Rs 269 crore on December 3.
Mutual funds invested heavily in short-term money market instruments due to inflow in fixed maturity plans. In December, 38 fixed maturity plans were launched, according to data collated by NewsWire18.
Of the 22 trading days, fund managers were net buyers in the debt market on 21 days. The highest daily net buying, amounting to Rs 4,468 crore, was recorded on December 15, followed by purchases of Rs 4,233 crore and Rs 3,867 crore on December 21 and December 16, respectively.
