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Mutual fund assets shrink in March

Reliance Mutual Fund is the only exception among the top 10 funds whose AUM rose from Rs 42,215 cr in Feb to Rs 46,306 cr in March, reports MC Vaijayanthi.

business Updated: Apr 03, 2007 22:57 IST

The assets under management (AUM) of mutual funds in India registered a significant fall in March. As per the numbers released by the Association of Mutual Funds in India (AMFI), AUM as at the end of March stood at Rs 2,95,286 crore as against AUM of Rs 3,52,686 crore as at the end of February.

Reliance Mutual Fund was the only exception among the top 10 funds. Its AUM rose from Rs 42,215 crore in February to Rs 46,306 crore in March. “The Rs 7,000 crore it raised through a single scheme in January adds substantial funds to Reliance Mutual Funds’ total funds under management and it had also launched several fixed maturity plans,” said Srividya Menon, research analyst at Credence Analytics.

Erosion in assets under management is a result of combination of factors. “While the Sensex rose by 140 points in March, the mid cap and small cap stocks on an average have given negative returns. Overall, the Sensex has lost 800 points in the first quarter and that is reflected in fund performance,” Menon reasoned.

Neither have the debt markets fared well in the period. “Indian bonds have handed investors a loss of 0.14 per cent this year, the second-worst performance in Asia after the Philippines,” to quote from the Bloomberg report.

Funds would also have pared their stock positions in the quarter to cut down losses in the net asset value of schemes, said analysts. Mutual funds have been net sellers in the equity markets for all the first three months this year. Net sale in January was Rs 1,342 crore, Rs 274 crore in February and Rs 1,884 crore as on March 30.

While new fund launches mopped up Rs 10,745 crore in January, redemptions that month took away Rs 13,118 crore. In February too redemptions outnumbered funds mobilised. New scheme launches netted Rs 15,856 crore in February and redemptions amounted to Rs 25,675 crore.