The AUM of the Indian mutual fund industry went up in February, thanks to the increased debt investments
04-Mar-2009 •Research Desk
The good news is that the assets under management (AUM) of the Indian mutual fund industry went up in February 2009. However, the not-so-good news is that the Indian capital markets had almost nothing to do with the rise in AUMs.
The prevailing trend of the Sensex languishing below the 10k mark continued all through February and investors, for a major part, kept away from equity. But at the same time, where equity lost out, debt gained. In uncertain market conditions, investors have turned to debt as their preferred choice of investment. And it was the debt investments that enabled the mutual fund industry to once again hold assets worth over Rs 5 lakh crore, a landmark achieved after September 2008.
In February, the industry's AUM rose by 8.86 per cent and stood at Rs. 5.01 lakh crore, as against Rs. 4.6 lakh crore at the end of January 2009. This was the third consecutive month when an increase in AUM was reported. Overall, since December 2008, the industry's assets have risen by a commendable 19 per cent.
At the top of the ladder was Reliance Mutual Fund once again. The AMC boasts of the highest AUM, worth Rs 81,627.08 crore. The second and third spots were also regained by their holders, HDFC Mutual Fund and ICICI Mutual Fund respectively. The former manages assets worth Rs 56,864 crore while the latter manages Rs 53,538 crore.
Out of the 36 fund houses in the industry, 35 are operation, with Goldman Sachs seeming sceptical about starting operations. But at the same time, Religare Mutual Fund, which entered the industry at the same time as Goldman Sachs, has proactively started operations with the acquisition of Lotus Mutual Fund. The AMC reported an impressive rise of 24 per cent in its AUM in February.
Baroda Pioneer Mutual Fund was another AMC that reported a significant rise in its AUM. Its assets rose to Rs 864.8 crore from Rs 39 crore due to increase in assets of its liquid funds. The fund house also launched the institutional plan of its only liquid fund in February 2009, and by month-end its reported assets stood at Rs 818 crore.
LIC Mutual Fund was the second biggest gainer in percentage terms, with a 29 per cent rise in its assets. The fund house is gradually moving up the ranking ladder. From the tenth rank, it moved up to the ninth rank in January and to the seventh rank in February. On the other hand, last month's seventh biggest fund house, Tata Mutual fund has slipped down to the ninth rank and has reported a fall in its assets by 4.18 per cent.
Overall, out of the 23 fund houses whose assets surged, a dozen reported a double-digit rise in their AUM in the month of February 2009. Of the fund houses that lost their assets, the biggest losers in percentage terms were Benchmark and Bharti AXA, witnessing a fall of 22.5 per cent and 11.24 per cent respectively.
As cited earlier, the primary reason for the rise in the assets was investors' shifting their focus towards debt oriented funds. The demand for fixed income funds has risen in wake of the expected key interest rate cuts and the fund houses are busy cashing in on these opportunities, which is evident from the fact that during February, six of the nine new funds were debt oriented.
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