MF Industry Witnesses A Slip Of 7.6% In March '07

The industry closed March 2007 with Rs 3.26 lakh crore of assets under management (AUM). This was lower than what fund houses managed in February 2007 - Rs 3.53 lakh crore. The industry posted a fall of 7.6%, highest in FY 2006-07.
Advance tax outflows, banks and institutions pulling out funds on account of CRR hikes and tight liquidity have meant that most fund houses have seen a contraction in their assets under management. The huge outflow of Rs 30,000 crore towards the advance tax payments in March led to severe crunch in the money market, with the call money rates shooting up to a 10-year high of near 60%. The benchmark indices also posted negative returns on a month-to-month basis, which further fuelled the shrinking in AUMs.

Reliance Mutual Fund emerged as the country’s largest fund house, displacing Prudential ICICI Mutual Fund from its first position end March 2007. Reliance Mutual Fund topped the charts with Rs 46306.78 crore of AUM — a rise of 9.7% over February 2007. This is clearly more than what Prudential ICICI Mutual Fund managed: Rs 37869.59 crore in March 2007 (a fall of 12.5% over February 2007).

Reliance Mutual Fund registered a net purchase of Rs 4090.86 crore during March 2007 over February 2007, thereby replacing Prudential ICICI from the top slot.

However the other toppers registered a decline in AUM in March 2007 compared to February 2007. Prudential ICICI Mutual Fund, UTI Mutual fund and HDFC Mutual Fund showed a decline of 12.5%, 8.1% and 8.8% respectively during March 2007. Occupying the third and fourth slots were UTI Mutual Fund and HDFC Mutual Fund, which had AUM of Rs 35488.25 crore and Rs 28357.99 crore, respectively. UTI Mutual Fund maintained its third position from the previous month. It has the highest AUM in December 2006. HDFC Mutual Fund also maintained its position from the previous month.

The pecking order in the asset management industry in February 2007 was in favor of Prudential ICICI Mutual Fund, which had Rs 43280.68 crore under management. Reliance Mutual Fund was the runner-up with Asset under Management of Rs 42215.91 crore. UTI Mutual Fund, the third position holder, had Rs 38602.99 crore AUM. HDFC and Franklin Templeton followed, with AUM of Rs 31079.88 crore and Rs 22102.19 crore, respectively.

Reliance Mutual Fund was the top fund in January 2007. Prudential ICICI Mutual Fund replaced it in February 2007. The Asset under Management of Prudential ICICI Mutual Fund and Reliance Mutual Fund in February 2007 were Rs 43280.68 crore and Rs 42215.91 crore respectively. However in March 2007 Reliance Mutual Fund again overtook Prudential ICICI Mutual Fund in terms of AUM.

The prominent Mutual Funds besides the top four includes, Franklin Templeton Mutual Fund (Rs 22018.8 crore), Birla Sun Life (Rs 19046.78 crore), and SBI Mutual Fund (Rs 16807.33crore). Besides Reliance Mutual Fund almost all the major funds showed a decline in AUM in March 2007 compared with February 2007.

Prudential ICICI Mutual Fund recorded the highest outflow with redemption of Rs 5411.09 crore in March 2007, while UTI mutual Fund, HDFC Mutual Fund, and Franklin Templeton Mutual registered an outgo of Rs 3114.75 crore, Rs 2721.89 crore and Rs 83.39 crore respectively. Birla Mutual Fund reduced their asset base by Rs 2023.54 crore in March 2007. Other major Mutual Funds like SBI Mutual Funds, Tata Mutual Fund, DSP Merrill Lynch Mutual Fund and Kotak Mutual Fund also witnessed substantial outgo with redemptions of more than 1000 crore. Fidelity Mutual Fund showed an increase in Asset under Management in March 2007, increasing by Rs 142.98 crore to Rs 5813.5 crore.