The mutual fund industry saw a sharp decline in its average assets in June -- with over 36 per cent plunge for some companies -- as investors withdrawal offset gains from an upward move in the equity market.
The average assets under management of the 39 fund houses in the country plunged by Rs 1.27 trillion or 16 per cent in June.
The average AUM of the industry stood at Rs 6,75,858 crore (Rs 6758.58 billion), as per data available with industry body AMFI.
The largest fund house Reliance MF witnessed a drop of 15 per cent in its AUM, while JM Financial and Axis MF appeared biggest lossers at over 36 per cent.
At the end of June, the AUM of Reliance MF dropped by nearly Rs 18,000 crore (Rs 180 billion) to Rs 1.01 trillion.
The AUM of second largest fund house HDFC MF declined 15 per cent or over Rs 15,000 crore (Rs 150 billion) to Rs 86,648 crore (Rs 866.48 billion).
Besides, ICICI Prudential MF saw its average assets plunging by 16 per cent to Rs 73,800 crore (Rs 738 billion).
"June has seen a sharp withdrawal by banks. Corporates withdrew from schemes to meet advance tax payment deadline. Also the bidding for the 3G and BWA spectrum brought in some liquidity crunch in the system," L&T MF CEO Sanjay Sinha said.
There have been large scale withdrawals from the MFs in the recent months, which perhaps is leading to the decline in AUM despite an upward move in the stock market.
In June itself the Sensex rose by 4.5 per cent. "Inflows into MFs could improve in the second half of July by when the tight liquidity condition is expected to ease," Sinha added.
The average AUM of UTI MF declined by over Rs 14,000 crore (Rs 140 billion) or 18 per cent to Rs 64,446 crore (Rs 644.46 billion).
Only a few fund houses, including Mirae Asset MF and Peerless MF, witnessed an increase in their AUM during the month. Those, who saw a decline in their AUMs also include Fortis MF (32 per cent), Taurus MF (20 per cent) and Canara Robeco (20 per cent) and SBI MF (7 per cent).
The government generated a revenue of over Rs one trillion through the auction of 3G and BWA, against an estimated Rs 35,000 crore (Rs 350 billion), resulting in a liquidity crunch in the system.
