Mutual fund assets drop over 18 per cent to Rs431,900 crore in October

Mumbai: Mutual fund assets in the country saw the sharpest ever monthly drop of over 18 per cent in October, amidst a stock market meltdown and heavy redemptions, data released by industry body Association of Mutual Funds of India (Amfi), showed.

The combined value of assets under management (AUM) of all mutual funds in the country dropped by over Rs 97,000 crore to Rs431,900 crore as of end-October from Rs529,000 crore as of September, according to the data released by the Association of Mutual Funds in India.

The top five fund houses - Reliance MF, HDFC MF, ICICI Prudential, UTI MF and Franklin Templeton accounted for a combined loss of over Rs45,000 crore in the value of assets.

Assets under management of 21 out of the 38 mutual funds in the country dropped by about 19 per cent to Rs200,000 crore as of 31 October, from Rs246,000 crore in the preceding month, according to Amfi data.

The fall was led by the country's largest mutual fund Reliance Capital Asset Management Ltd, which saw its assets drop 17.8 per cent to Rs71,093 crore as of 31 October.

State-run SBI MF saw its average Asset Under Management drop by Rs4,500 crore to Rs24,727crore in October, Amfi data showed.

Other major fund houses such as ICICI Prudential Asset Management Co. Ltd, HDFC Asset Management Co. Ltd and UTI Asset Management Co. Ltd haven't yet released their data for October.

Besides, Edelweiss MF, Morgan Stanley, JP Morgan, JM Financial, DSP Merrill Lynch and DBS Cholamandalam also witnessed a sharp fall in their assets as if end-October.  ABN Amro, however, defied trend with its average assets under management increasing Rs1,839 crore to Rs8,965 crore.

The Bombay Stock Exchange sensitive index, the Sensex, had fallen 23.89 per cent in October to end at 9,788.06 points, as foreign institutional investors turned sellers. In October alone, foreign investors withdrew $3.53 billion from the Indian market.

Overnight lending rates also ruled high in September, hitting 17.5 per cent on 1 October, following an estimated Rs40,000 crore outflow in September to advance tax payments. This led to mutual funds selling Rs26,081 crore of debt in October, according to data provided by capital markets regulator Securities and Exchange Board of India.

Since then, the Reserve Bank of India has unveiled several measures to infuse liquidity into the system, including a cut in the policy rate and creation of a special window for mutual funds, which let banks withdraw money to meet the liquidity requirements.

The Indian Banks Association on Saturday opened a special counter to assist mutual funds facing redemption pressure.