Fund houses had to deal with a double whammy in October. On the one hand, the Sensex fell by 23 per cent and the value of all equity assets plummeted. On the other, the liquidity crisis resulted in a huge redemption in debt schemes. Both these resulted in a heavy decline in fund assets. ICICI Prudential Mutual Fund saw its assets decline by Rs 10,594 crore to end at Rs 39,209 crore.
This fund house has acted fast to deter future redemptions. ICICI Prudential Mutual Fund has hiked the exit load on some of its FMPs (interval funds) to as much as 5 per cent. Incidentally, this is the maximum a fund house can charge as exit load on their close-ended debt schemes.
The exit load on the Annual Interval Plan Series I, II, III, and IV has been raised to 5% and that on half-yearly interval plans have been raised to 4%. The revision in exit load will be with effect from November 12, 2008.
That’s not all. The AMC has decided to also woo retail investors and not cast its lot only with institutional ones. It has introduced a Micro SIP facility in its debt scheme, ICICI Pru Liquid Plan-Growth Option (with effect from November 12, 2008). Under this facility, investors can make SIPs in this debt scheme via a minimum installment of Rs 100 and in multiples of Rs 10 thereafter.
In October, debt funds lost nearly Rs 58,000 crore of their assets, of which Rs 10,719 crore had gone out from FMPs. The move to raise the exit load should deter investors from moving out before maturity.