The year 2010 did not start on a great note for the mutual fund (MF) industry.
In fact, after reaching all-time highs in November, 2009, the assets under management (AUM) of the industry have been dipping consistently.
The industry's AUM reached a record Rs 805,684.48 crore in November, 2009. It fell thereafter in December by 1.62 per cent to Rs 792,665.68 crore. The starting month of the new year did not bring about a change of fortunes either. In fact, it brought greater misery as assets dipped by as much as 4.15 per cent.
The total assets of the MF industry at the end of January stood at Rs 759,791.15 crore, a drop of Rs 32,874.5 crore.
However, the issue should be put in proper perspective and that can be done if you look at the January, 2009 figures. The assets of the industry at that time were Rs 459,945.24 crore. Since then, despite the recent drops, the gain is still substantial at 65 per cent.
The recent negativity however, shows almost across the industry. Out of a total of 37 fund houses, 22 have seen a dip in their assets, the highest drop being registered by Edelweiss MF at 14.28 per cent. There were four other fund houses that saw a dip in their assets by over 10 per cent.
Swimming against the tide strongly were Baroda Pioneer MF and Sahara MF, which saw an increase in their assets. While Baroda Pioneer MF increased its assets by 23 per cent, Sahara MF did so by 21.87 per cent.
However, there was no change as far as asset hierarchy was concerned as the top three fund houses, Reliance MF, HDFC MF and ICICI Prudential MF maintained their respective positions. This was despite the fact that all three saw a drop in assets - Reliance MF saw a fall of 2.28 per cent and HDFC MF by 2.46 per cent. But it was ICICI Prudential MF that saw the biggest fall in assets among the top three fund houses to the tune of 4.93 per cent.
Reliance and HDFC have seen a fall in their assets for two consecutive months now - in December, 2009 they fell by 1.86 per cent, and HDFC MF by 5.09 per cent. ICICI Prudential MF remained in the green in December as its assets rose by 0.36 per cent.
The reason that is causing the greatest pain to the industry is the correction that the stock markets witnessed then, as well as banks staying away from the fund industry on the express orders of the RBI. Another factor that has conspired to drop the assets is the ban on entry loads that has caused the inflow tap to slow down as distributors and agents have virtually stopped selling MF products (it largely killed of their commissions).
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