Country's mutual fund industry witnessed a 5.9 per cent drop in its assets in June, buckling under the pressure of the meltdown in the stock market and the slow growth in the fixed income schemes in the month.

The combined average assets under management of the 33 fund houses in the country dropped to Rs 5,64,599.28 crore (Rs 5,645.99 billion) at the end of June as compared to Rs 6,00,266.32 crore (Rs 6,002.66 billion) in May, according to data released by the Association of Mutual Funds in India.

"The main reasons, which impacted the growth in assets were the advance tax payments by corporates at the end of June, which led to almost no growth in the fixed income schemes, while equity investments were obviously impacted by the fall of about 18 per cent in the Sensex," mutual fund tracking firm Value Research Online CEO Dhirendra Kumar said.

Reliance [Get Quote] Mutual Fund continues to be the top fund house in the country despite its average AUM falling to Rs 90,813.45 crore (Rs 908.13 billion) at the end of June from Rs 98,430.93 crore (Rs 984.30 billion) in the previous month.

However, ICICI [Get Quote] Prudential, the second largest mutual fund, witnessed a marginal gain of Rs 413 crore (Rs 4.13 billion) in its assets at Rs 59,473.58 crore (Rs 594.73 billion) as against Rs 59,060.02 crore (Rs 590.6 billion) in the previous month.

Taurus Mutual Fund Director R K Gupta believe that more than the equity side, the assets may have been impacted by banks and corporates pulling out from income schemes because of the hike in interest rates.

"July could be the worst hit period for the mutual funds as withdrawals from corporates and banks in these schemes are likely to increase further," Gupta added.

HDFC [Get Quote] MF has moved ahead of UTI MF as the third largest fund house in the country with AUM of Rs 52,710.80 crore (Rs 527.10 billion) at the end of last month as against the state-run fund house's Rs 50,770.56 crore (Rs 507.70 billion).

UTI MF's average assets under management dropped Rs 3,881 crore (Rs 38.81 billion) to Rs 50,770.56 crore (Rs 507.70 billion) last month as against Rs 54,651.68 crore (Rs 546.51 billion) in May.

Besides, AUM of Franklin Templeton MF stood at Rs 24,742.06 crore (Rs 247.42 billion) as against Rs 27,990.87 crore (Rs 279.90 billion) in the previous month.