The mutual fund industry continues to battle with declining assets under management. Mutual funds' asset base through FY12 has been on a steady decline. At the end of the June quarter, the AUM stood at Rs 7.43 lakh crore, then slipped to Rs 7.12 lakh crore at the end of September and further to Rs. 6.81 lakh crore in December quarter.
At the end of March quarter, the AUM stood at Rs 6.64 lakh crore. On a year-on-year basis, the AUM fell five per cent and sequentially 2.5 per cent
“The industry has had a bad year. It is still adjusting to the changes that occurred over the last one year. Also, the industry has always seen low growth during weak equity market performance,” said Mr Naval Bir Kumar, President &CEO, IDFC Mutual Fund.
Two third of the fund houses witnessed fall in average AUM in the latest quarter.
“This (March) quarter it was mainly bank money that moved out of the industry because of the implementation of the RBI directive (restricting banks' investments in MFs to 10 per cent of net worth),” said Mr. A Balasubramanian, Chief Executive Officer, Birla Sun Life Asset Management Company.
The top five mutual funds — HDFC, Reliance, ICICI Prudential, Birla Sun Life and UTI Mutual Fund — together accounted for nearly 54 per cent of the total industry AUM at Rs 3.56 lakh crore. This is higher than the 52.5 per cent they accounted for in the previous quarter, but lower than the 55.9 per cent they accounted for at the end of the March 2011 quarter.
Reliance MF leads drop
Reliance Mutual fund has seen the highest drop in AUM — 23 per cent year-on-year — which fell from Rs 1.01 lakh crore to Rs 78,111 crore. On a quarterly basis, the AUM of the fund house has fallen by five per cent. ICICI Prudential saw its AUM dropped by less than one per cent. UTI Mutual fund, Birla Sun Life and HDFC have seen an increase in their AUM.
Since March 2011, the benchmark equity indices have declined by 10.5 per cent, while the equity AUM of the industry (as of February 2012) has fallen by about five per cent. However, rising interest rates have seen the AUM under income schemes increasing, with Fixed Maturity Plans becoming popular among investors and fund houses alike.
Mood not optimistic
According to data from Bonanza Portfolio, 158 FMP schemes were launched in FY12. “The mood is not really optimistic in the market. But the liberalisation of the advertising code is being seen as a very positive change. Many believe that this will help in bringing in new investors,” said Mr Hiren Dhakan, Associate Fund Manager, Bonanza Portfolio.