The 3G auction may have been healthy for the government coffers, but it has eaten into the assets under management (AUM) of mutual fund houses.
Total AUM dipped by Rs 127,624 crore in the month of June, the highest ever single-month fall, and stood at Rs 677,616 crore — close to where it stood a year ago.
“The majority of this outflow is on account of the 3G auction as the money has gone out but has not come back,” said the head of a leading mutual fund on the condition of anonymity.
Large fund houses accounted for the majority of the outflows and the top 10 mutual funds houses in terms of AUM witnessed an aggregate outflow of Rs 96,377 crore.
The 3G auction is perceived as an important factor, but it is not the only one: the general dip in liquidity also caused outflow.
“Advance tax payment in June also made a difference. Close to Rs 15,000 crore went out for the same,” said the head of another large fund house who did not wish to be named.
The industry was already under pressure for not being able to mobilise retail investor’s money for several months now, and this only added to the pressure, insiders said.
“The trend that began since the no-entry load regime kicked in and that continues,” said one mutual fund head. “The retail money is not coming in even though the industry is more transparent and is communicating its product-performances in a better manner.
“The reality is that mutual fund distributors have disappeared, and the agent commission is making a big difference as they are selling Ulips that are more rewarding.”