Witnessed Sharp Fall In AUM Asset Under Management - Nov 04, 2008

Mutual fund industry has reported the drastic fall of 18.37% in its Asset Under Management (AUM) to Rs 4.31 lakh crore in October compared with 5.29 lakh crore in September 2008. Plunge in the stock market, huge redemptions in liquid schemes and lack of any fresh inflows has led to the sharp decline in assets of fund houses. AUM of funds of funds (FoFs) was Rs 886.58 crore in October 2008. Due to the pressure from banks and corporates withdrawing money to meet their liquidity needs, the redemptions were high. Also the redemptions were seen since September as advance tax payments started.

In the case of most fund houses, the fall in AUM ranges from 15 to 25%. However, some have reported a more than 30% drop.All the 35 out of 37 fund houses, which reported their monthly AUMs have posted a fall in AUM. The new entrant for the month is Religare AEGON AMC, which has filed offer document with Sebi and waiting for approval to unveil those funds.

The top three funds recorded a falloff in AUM in October 2008 compared with the September 2008. Reliance Mutual fund continued to be in the first position with AUM of Rs 71093.71 crore but recorded the outflow of Rs 15400 crore in its AUM on October 2008 comparing to the month of September 2008, which witnessed highest outflow in this month. HDFC MF retains the second position, but it sheds by 12.54% in its AUM to Rs 45479.37 crore. ICICI Prudential was the next looser with outflow of Rs 10590 crore (21.28%) in AUM to Rs 39182.45 crore.

The other top mutual funds, in term of AUM, UTI has recorded the deep fall of 14.21% to Rs 38283.63 crore. Birla MF also recorded the fall of 9.02% in its AUM (Rs 34187.29 crore) and SBI MF sheds by 15.45% to Rs 24727 crore.Reliance MF recorded the highest outflow of Rs 15400 crore (17.80%) in its AUM and the ICICI Prudential followed it with outflow of Rs 10590 crore (21.28%) in October the month of September 2008.

In the category of Fund houses maintaining AUM more than Rs 10000 crore, Franklin Templeton MF has recorded the highest outflow of Rs 6352.15 crore to Rs 22003.86 crore in the month of October over the September 2008. Kotak Mahindra with Rs 3896 crore (20.71%) fall, Tata MF with Rs 3777.88 crore fall followed FT.

The funds with relatively smaller corpus having AUM less than Rs 1000 crore has registered the sharp fall in AUM, Mirae Asset MF registered 56.52% fall in its AUM (Rs 1004.18 crore), AIG Global Investments Group declined by 44.18% to Rs 1688.92 crore in its AUM and Baroda MF registered an outflow of 44.04% to Rs 42.87 crore of AUM in the month of September compared with the month of August 2008.

Realising the fund crunch being faced by MFs, the Reserve Bank of India has provided liquidity support to MFs through banks. The Indian Banks Association has opened a special counter to assist mutual funds facing redemption pressure.