The Hindu Business Line : MFs' asset base shrinks in June

IN June, while the equity markets soared, mutual funds ended up losing close to Rs 3,500 crore in assets. Data released by Association of Mutual Funds in India pegs the mutual fund industry's assets under management (AUM) for June at Rs 1,64,546 crore, against Rs 1,67,978 crore in May. This is against a Rs 9,500-crore rise from April to May.

While several asset management companies attribute this loss to profit booking by investors fearing a downturn in the equity markets, the fall in assets has come despite the fact that AMCs collected over Rs 13,000 crore in income funds, that do not invest in equity markets.

In equity funds, AMCs collected Rs 4,512 crore and saw redemptions worth Rs 4,465 crore, resulting in a marginal increase of Rs 47 crore. Mutual funds have been net sellers in the equity markets in June to the tune of Rs 1,817 crore, according to data from Securities and Exchange Board of India.

Among the fund houses, Kotak Mahindra Asset Management lost over Rs 970 crore of its assets in June, while Franklin Templeton's AUM shrank Rs 824 crore.

Mr Sandesh Kirkire, Chief Executive Officer, Kotak Mahindra AMC, said that largely redemptions have been restricted to liquid funds. Corporates are facing quarter end pressures and prefer to stay in cash, rather than invested in short-term debt funds and liquid funds.

On the retail investors' front, AMCs said that there is continued enthusiasm for new schemes, even though equity markets are peaking. "Several of our investors have booked profits on existing schemes and are entering our new schemes," said the CEO of an AMC.

With several new equity fund offers currently open, retail investors' appetite for the same can be assessed when the July figures are announced. Birla Sun Life's Gen Next Fund closed on July 12, while Standard Chartered Mutual Fund's maiden equity fund is closing on July 14.

Kotak Mahindra's Contra Fund, whose IPO closed on July 1 collected over Rs 650 crore from 75,000 investors, Mr Kirkire said.

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