Our Bureau

Mumbai, April 2 The asset base of the mutual fund industry fell 6.61 per cent in March 2008, according to the data released by the Association of Mutual Funds in India (AMFI).

‘Pull-outs’ by corporates and banks, mark-to-market losses during the month and withdrawals by banks from debt funds drove down the collective assets under management, said industry experts.

Thirty one of the 33 mutual fund houses reported declines in their assets under management (AUM), the exceptions being Birla Sun Life whose AUM rose 3.46 per cent and Mirae Asset Management which reported its AUM for the first time.

The total mutual fund asset base declined by Rs 37,394.10 crore in March. The assets under management as of March-end stood at Rs 5,27,705.93 crore, against Rs 5,65,100.04 crore a month ago.

The asset base had shown an increase of 3.17 per cent for the month of February, which was mainly on the back of Reliance Mutual Fund reporting a substantial rise of 21.13 per cent in its AUM.

The leader of the pack – Reliance Mutual Fund – too reported a decline in its AUM (by 2.77 per cent) in March, although it continued to maintain its position. ICICI Prudential Mutual Fund’s AUM dipped 8.36 per cent.

“The drop is a combination of pull-outs by corporates and banks due to capital inadequacy combined with the mark-to-market losses during the month, and finally money withdrawn by the banking sector from debt funds,” said Mr Sandesh Kirkire, Chief Executive Officer, Kotak Mahindra Asset Management.

“There weren’t any major IPOs in the month of March and even the NFOs did not do well, so this also contributed to the dip in the mutual fund base,” said a fund manager.

Then there is the annual pattern of corporations booking profits on their MF investments, and also withdrawing money for tax planning, said the head of research of a mutual fund house.

Huge redemptions by banks in liquid funds are also the order of the month every March, and this year was no exception, said fund managers.

A research report by a Mumbai-based broking firm stated that as on February 29, mutual funds were sitting on cash worth Rs 22,908 crore waiting to be deployed in the market.

This was just as well as the crash in equity values in March would have pushed down the AUM even further, said a fund manager.

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