Mutual funds’ AUMs rise 7.7% in April

THE assets under management (AUM) of equity mutual funds stood at Rs 1,99,712 crore in April 2008, up by 7.7% from March 2008. On adjusting for the net inflows, the increase was only 7.5%. This was less than the market rise of approximately 10.5%. The AUM of the equity-diversified funds rose by 11.4%, whereas that of the sector funds and tax planning funds advanced by 3.4% and 16.7% respectively. On the other hand, the AUM of index funds fell by 8.6%. Reliance Mutual Fund saw the largest increase of Rs 2,866 crore in its AUM, followed by SBI Mutual Fund and UTI Mutual Fund. Reliance Mutual Fund, the number one mutual fund in the country in terms of assets under management (AUM), has become the first mutual fund house in India whose AUM has topped the Rs 1 lakh crore-mark. On the other hand, ING Mutual Fund recorded a marginal decline in its AUM. Fund flows into equity MFs fell by a sharp 96% to Rs 251 crore in April 2008. The fall in the overall fund flow was due to the 81% reduction in the amounts mobilised through the NFOs coupled with a 51% reduction in the money flowing into the existing schemes. The amount mobilised through the NFOs stood at only Rs 825 crore in April 2008 (as compared with Rs 4,331 crore in March 2008). The NFO collections include the amounts raised by DSP Merrill Lynch Natural Resources and New Energy Fund, Mirae Asset India Opportunities Fund, Morgan Stanley ACE Fund, Tata Growing Economies Infrastructure Fund and UTI Long Term Lotus India Mid and Small Cap Fund, which was launched in April 2008 but did not close in the month (as the allotment of units has not been completed). The collections made by these funds will be reflected in the next month’s fund flow figures. Cash levels continued their upward trend in April 2008 as MFs shored their cash levels in the midst of global uncertainties, domestic concerns such as high inflation and low IIP numbers, and negative sentiments. The absolute cash levels for all the existing equity funds rose by 25% to Rs 23,978 crore in April 2008 from Rs 19,214 crore in March 2008. Even the cash as a percentage of the total corpus increased to 12.4% in April 2008 from 11.1% in March 2008. Further, the total cash sitting with the MFs, including the cash mobilised through the recently launched NFOs (Rs 825 crore), stands at a healthy Rs 24,803 crore. Flush with cash, MFs are well placed to maintain the buying interest and propel the market forward. The cash level for all funds more than three months old also showed a similar trend, rising to 12.1% of the total corpus in April 2008 (from 11.1% of the total corpus in March 2008). This once again reflects the cautious stance adopted by MFs. In line with the upward movement in the equity markets, most sector funds charted into the positive territory during April 2008, erasing much of the losses seen in March 2008. Pharmaceutical funds outperformed the Sensex whereas funds in the automobile, banking, FMCG and technology sectors underperformed the Sensex. Additionally, while FMCG funds outperformed the BSE FMCG Index, auto and technology funds underperformed the BSE Auto and the BSE IT Index respectively and banking and pharmaceutical funds performed in line with their respective benchmark indices (the BSE Bankex and the BSE Healthcare). Pharmaceutical funds gave the highest returns in April 2008, followed by technology and FMCG funds.