The average assets under management of the mutual fund industry for the quarter ended September grew by about eight per cent to Rs 7.87 lakh crore. This is the sharpest quarterly increase the industry has seen in the last 21 months.
The growth in asset base was mainly on the back of increase in liquidity in the system and equity valuations, said fund analysts.
“In the last quarter, the RBI eased liquidity by way of cuts in SLR (Statutory Liquidity Ratio) and CRR (Cash Reserve Ratio). During the same period, equity markets have also risen, leading to an increase in equity AUM. However, there have been no incremental flows into equity schemes,” said Hiren Dhakan, Associate Fund Manager, Bonanza Portfolio. The RBI slashed the SLR by 100 basis points in July and cut the CRR by 25 basis points in September. Large amount of money has flown into the mutual fund industry through liquid and bond funds, said analysts. According to data from Bonanza Portfolio, key indices during the September quarter have given good returns leading to an overall increase in valuations and consequently, the MFs assets.
The CRISIL Balanced Fund Index gave returns of about six per cent and the CRISIL Composite Bond Fund Index was up about three per cent. S&P CNX Nifty went up by eight per cent while the BSE Sensex gained 7.6 per cent.
Even while equity valuations moved up, fund house officials said they were not seeing inflows into equity schemes.
“About 4-5 per cent of the AUM on the equity side could be attributed to the rise in markets in September.
“But these schemes are not attracting too much money,” said Sethuram Iyer, CEO of Daiwa Asset Management.
Among the top five fund houses in the industry, UTI mutual fund has seen the highest increase in asset base, up 16 per cent to Rs 70,782 crore.
Though the cumulative AUM of the top five has increased by 47 per cent during the September quarter, their contribution to the industry’s average assets under management has remained unchanged at 54 per cent compared to the June quarter.
Of the 44 mutual fund houses in the industry, 16 fund houses’ assets grew by more than 10 per cent. Ten fund houses saw their asset base decline with Sahara Mutual fund seeing the steepest decline by 70 per cent to Rs 238 crore from Rs 787 crore at the end of the June 2012 quarter.