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Mutual funds assets take a beating

Aabhas Pandya

Thanks to the meltdown in the equity markets, the mutual fund industry's assets under management have fallen below the Rs 1000 billion mark for the first time in this calendar year. According to data released by Association of Mutual Funds in India (AMFI), the total assets were Rs 974.62 billion on September 30, 2000. That apart, September was the first month in the current calendar when there has been a net outflow from the fund industry. According to AMFI, while there was a gross inflow of Rs 78.06 billion, the gross outflow was Rs 85.84 billion, thus translating into a net outflow of Rs 7.78 billion.

The fund industry had crossed the rubicon in January this year when funds under management broke the Rs 1000-billion barrier, rising from Rs 970.28 billion in December 1999 to Rs 1015.65 billion in January 2000. In fact, the cumulative money being managed touched an all-time high of Rs 1130 billion in March when fresh inflows coupled with a galloping market bolstered the assets of equity and balanced funds. Thus, in the last six months, assets have dropped 13.75 per cent.

However, despite the high-pitched volatility with both equity and debt funds taking a beating, the last six months (beginning April) have seen net inflow of Rs 58.60 billion. This includes an inflow of Rs 16.78 billion in fund IPOs, launched in the last six months. In other words, existing schemes have seen inflows of over Rs 41 billion, which indicates that mutual funds continue to find favour with investors. And, with both equity and debt in the dumps, investors have been parking money in liquid funds, which have seen their assets grow by nearly Rs 16 billion in the last six months.

The inflows have come despite the jarring performance of the much-fancied technology funds, all of which are currently sharply below their offer price of Rs 10, with some funds losing as much as 50 per cent of their value. It may be recalled that the beginning the year saw the launch of seven technology funds, which mobilised over Rs 22 billion.

It is not surprising that the kitty of equity funds has shrunk the most in the last six months. The assets under management for growth funds have dropped by a whopping 34 per cent or Rs 114.09 billion from Rs 336.47 billion on March 31 to Rs 222.38 billion on September 30, 2000. This includes tax planning or equity linked savings schemes.

The share of equity funds in the total pie has also come down from 30 per cent in March to 23 per cent in September 2000. On the other hand, the family of debt funds (including gilt and short-term debt funds) has seen a marginal drop of 0.11 per cent in assets under management from Rs 526.01 billion to Rs 525.43 billion. Income funds now command nearly 54 per cent of the total assets against 46 per cent in March 2000.

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