The mutual fund (MF) industry faced turbulence due to a depreciating rupee with the industry losing Rs. 50,600 crore to end below the Rs. 8 lakh crore-mark in terms of assets under management (AUM) in July. This is the first time that numbers fell below the Rs. 8 lakh crore-levels since March 2013.
"Most of the outflows were from liquid funds which witnessed volatility in performance following the RBI's liquidity-curbing measures to strengthen the rupee," said a Crisil report.
Actual AUM stood at Rs. 7.61 lakh crore or a 6% month-on-month fall from the previous month, as per the Association of Mutual Funds in India (Amfi).
"The slide of the rupee as well as interest rates will be some of the prime factors that would affect the MF industry going forward," says Taher Badshah, senior fund manager, Motilal Oswal AMC.
Within the MF universe, liquid funds faced heavy redemption pressure. Liquid funds' AUM fell by 21% to Rs. 1.29 lakh crore primarily due to outflows of Rs. 45,300 crore.
Investor interest swung to fixed maturity plans (FMPs). "Rise in FMP launches was an outcome of the recent rise in bond yields," Crisil noted.