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Fund houses like HDFC Mutual Funs,Reliance Mutual Fund remain under pressure in Q2

Of 43 fund houses,36 see fall in equity assets; HDFC MF,Reliance MF and UTI MF worst hit.

Written by Ashley Coutinho | Mumbai | Published: December 20, 2013 3:15:19 am

Most fund houses continued to see a decline in equity assets in the second quarter of the current financial year.

Thirty-six of the 43 fund houses saw a decline in equity assets for the three months to September 2013 over the previous quarter,data collated from Value Research show. In absolute terms,HDFC MF (Rs 2,935 crore),Reliance MF (Rs 2,641 crore) and UTI MF (Rs 1,305 crore) saw the highest decline in equity assets during the period.

Over the year-ago period,equity assets of the larger fund houses — Reliance MF (Rs 5,042 crore),DSP BlackRock Mutual Fund (Rs 2,612 crore),HDFC Mutual Fund (Rs 2,224 crore),Sundaram MF (Rs 1,984 crore) and UTI MF (Rs 1,809 crore) — declined the most. In sum,the top 10 fund houses lost R16,321 crore by way of equity assets. In percentage terms,JM Financial MF (Rs 162 crore) and HSBC MF (Rs 556 crore) assets declined the most. Axis MF (Rs 360 crore),IDFC MF (Rs 237 crore) and JP Morgan MF (Rs 85 crore) were among the few fund houses that bucked the trend and added the most in equity assets during the period.

Overall,equity assets of the MF industry declined 11% to Rs 1.64 lakh crore in the three months to September 2013 from Rs 1.84 lakh crore a year ago. In the same period,assets under management (AUM) of equity schemes in the overall asset mix declined to 19% of industry’s overall AUM from 23% a year ago,as per Amfi data.

Equity assets are a lot stickier than debt assets and can generate higher revenues for the fund houses. Fund managers have been advising investors to continue their SIP portfolios even in tough times but long-term investors who entered the market in 2007 and early 2008 have been particularly keen on exiting during market upmoves.

“Equity investors have been redeeming during every market upmove,and as and when they have broken even on their long-term investments,” said Arvind Sethi,CEO,Tata MF.

“The year 2013 has been volatile for the most part. Fund houses have been trying to educate investors about the staying invested for the long-term and investing through SIPs (systematic investment plans) but the market volatility has weighed on investor sentiment,” added Vicky Mehta,a senior research analyst,Morningstar India.

Equity MF schemes saw outflows of R7,469 crore in the six months to September even as the benchmark BSE Sensex rose nearly 3% in the period. This follows outflows of R12,931 crore in FY13,a year when the benchmark indices rose about 8%.

Fund houses are hoping the next two quarters will be better,especially if the equity market continues its upsurge. “The worst seems to be behind us and we can sense renewed HNI interest in equity schemes,” said Sethi.

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