THE Indian mutual fund industry, which is already struggling to keep the net asset value (NAV) of its schemes ticking, has been dealt another blow. With stock prices plummeting over the past six months, fresh inflows appear to be drying up rapidly.Fund houses have seen the average assets which they manage — AUM in industry parlance, down by close to 11% in June, and marking the highest negative growth for the month of June since 2003. Earlier, in March this year, AUMs had registered a negative growth. Data released by the industry’s lobbying arm, Association of Mutual Funds in India (AMFI), shows that assets which local mutual funds manage have declined to Rs 543,000 crore compared with a little over Rs 600,000 crore during May. However, this figure does not include the AUMs of Sundaram BNP Paribas, ING, Taurus and BoB which is awaited. But even after the data from these fund houses is incorporated, it may not make a significant difference to the last month’s trend of a negative growth.Mutual fund industry officials have attributed the recent outflows to the redemptions seen in the liquid and liquid-plus funds. The decline on the equity front, however, is being attributed more to the sharp fall in valuations rather than redemptions. Fund managers have denied any pressure on heavy redemptions though they have asserted that net inflows in the equity schemes have come down drastically.The CEO of a large fund house said inflows were drying up, adding that it would be a challenge to woo investors, given the difficult macro economic environment. Their concerns are well evident from the numbers disclosed by the individual fund houses. Of the 29 fund houses that have disclosed their AUM, 24 have registered a decline in their asset base while two of them recorded a growth of less than 1%. ABN AMRO, Mirae Asset Management and DBS Cholamandalam have been the only fund houses to have recorded a positive growth. While Reliance continues to retain its position as the largest fund house in terms of size, its assets have also declined by over 8% to Rs 90,000 crore.
3.7.08
The Mutual Fund Industry is facing a slowdown
THE Indian mutual fund industry, which is already struggling to keep the net asset value (NAV) of its schemes ticking, has been dealt another blow. With stock prices plummeting over the past six months, fresh inflows appear to be drying up rapidly.Fund houses have seen the average assets which they manage — AUM in industry parlance, down by close to 11% in June, and marking the highest negative growth for the month of June since 2003. Earlier, in March this year, AUMs had registered a negative growth. Data released by the industry’s lobbying arm, Association of Mutual Funds in India (AMFI), shows that assets which local mutual funds manage have declined to Rs 543,000 crore compared with a little over Rs 600,000 crore during May. However, this figure does not include the AUMs of Sundaram BNP Paribas, ING, Taurus and BoB which is awaited. But even after the data from these fund houses is incorporated, it may not make a significant difference to the last month’s trend of a negative growth.Mutual fund industry officials have attributed the recent outflows to the redemptions seen in the liquid and liquid-plus funds. The decline on the equity front, however, is being attributed more to the sharp fall in valuations rather than redemptions. Fund managers have denied any pressure on heavy redemptions though they have asserted that net inflows in the equity schemes have come down drastically.The CEO of a large fund house said inflows were drying up, adding that it would be a challenge to woo investors, given the difficult macro economic environment. Their concerns are well evident from the numbers disclosed by the individual fund houses. Of the 29 fund houses that have disclosed their AUM, 24 have registered a decline in their asset base while two of them recorded a growth of less than 1%. ABN AMRO, Mirae Asset Management and DBS Cholamandalam have been the only fund houses to have recorded a positive growth. While Reliance continues to retain its position as the largest fund house in terms of size, its assets have also declined by over 8% to Rs 90,000 crore.
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