FMP outflows drag down MFs’ assets

Massive outflows in fixed maturity plans (FMP) and liquid schemes have resulted in a steep fall in assets under management (AUMs) of fund houses in October. FMPs, which constitute nearly a quarter of the total AUM industry, witnessed panic redemption following concerns about the credit quality of debt papers held by these schemes. Reliance Mutual Fund has retained its numero uno position, but its average AUM of Rs 71,093 crore is down 18% over the previous month, and is back to levels seen in September last year. This fund house had seen its AUM cross Rs 1 lakh crore in April this year. HDFC, which had earlier displaced ICICI Prudential as the second-largest fund house, reported an average AUM of Rs 45,479 crore for October, down 12.5% over the previous month. The third-largest AMC, ICICI Prudential, is yet to disclose its asset position for the month. Other fund houses that have reported steep decline in AUMs include AIG Global (-44.2%), Canara Robeco (-33.6%), Lotus India (-31.2%), Principal AMC (-29.7%), Deutsche AMC (-28.4%) and DBS Cholamandalam (-25.5%). Birla Sunlife Mutual Fund and Unit Trust of India too are yet to disclose their average AUM for October.

India Infoline gets SEBI nod for sponsoring mutual fund

India Infoline has proven credentials in mobilizing Mutual fund assets being one of the largest pan-India distributors for all the leading asset management companies.

India Infoline Ltd, one of the leading players in the Indian financial service space, announced that it has received the in-principle approval from SEBI for sponsoring mutual fund.

Speaking on the occasion, R Venkataraman, Executive Director, India Infoline said ‘We are indeed pleased to receive this in-principle approval from SEBI. In line with the trend in the developed markets, we expect Mutual Funds to be the vehicle of choice for the retail investors to participate in the equity markets.

An entry into the Mutual Funds space is an opportunity for us to continue to expand our offerings under the financial services domain in line with our long-term strategy. We will look to build up a strong team to run this business and will leverage upon our existing distribution strengths and proven research capabilities to grow the asset management business.’

India Infoline has proven credentials in mobilizing Mutual fund assets being one of the largest pan-India distributors for all the leading asset management companies. The company’s distribution network comprises 886 business locations spread across 350 cities and towns of India. Its acclaimed research team provides insights into equities, mutual funds, commodities and other sectoral themes.

Religare to acquire Lotus India AMC

Religare Enterprises (REL) one of the leading financial services groups of India, confirmed that it has agreed to acquire Lotus India asset management company (Lotus India AMC) from it`s majority shareholders, Alexandra Fund Management an affiliate of Fullerton Fund Management company and Sabre Capital. The acquisition is subject to the regulatory approvals. Religare didn`t disclose the amount for which the acquisition was done, which is subject to regulatory approval.

Lotus India AMC manages assets in excess of Rs 50 billion domestic mutual funds. Religare after the acquisition will infuse additional funds into the schemes of Lotus India AMC. The existing investors of Lotus India will be supported and served by Religare.

Lotus India AMC is a joint venture between Fullerton Fund Management Group and Sabre Capital Worldwide.

Religare has an existing presence in the asset management space through a joint venture with Aegon. The company made the acquisition with intent to further strengthen its position in asset management space in the Indian market.

Confirming this development Sunil Godhwani-CEO and managing director, Religare Enterprises said, ``We are delighted to take on a business that has been backed and promoted by institutions of such stature and pedigree and look forward to taking it to the next level of growth. Like all other businesses that Religare operates globally we are committed to building it further as a business of excellence with a leadership position.``

Gerard Lee, CEO Fullerton Fund Management said, ``We are pleased to transfer ownership to a leading financial services brand such as Religare with its strong reach and distribution might. Under the new stewardship we firmly believe that Lotus will scale greater heights and we see this stake sale as the beginning of a new strategic relationship with Religare.``

Shares of the company gained Rs 3.5, or 1.08%, to trade at Rs 329. The total volume of shares traded was 18,134 at the BSE (3.10 p.m., Tuesday).

Sharp Fall In AUM Asset Under Management

Mutual fund industry has reported the drastic fall of 18.37% in its Asset Under Management (AUM) to Rs 4.31 lakh crore in October compared with 5.29 lakh crore in September 2008. Plunge in the stock market, huge redemptions in liquid schemes and lack of any fresh inflows has led to the sharp decline in assets of fund houses. AUM of funds of funds (FoFs) was Rs 886.58 crore in October 2008. Due to the pressure from banks and corporates withdrawing money to meet their liquidity needs, the redemptions were high. Also the redemptions were seen since September as advance tax payments started.

In the case of most fund houses, the fall in AUM ranges from 15 to 25%. However, some have reported a more than 30% drop.All the 35 out of 37 fund houses, which reported their monthly AUMs have posted a fall in AUM. The new entrant for the month is Religare AEGON AMC, which has filed offer document with Sebi and waiting for approval to unveil those funds.

The top three funds recorded a falloff in AUM in October 2008 compared with the September 2008. Reliance Mutual fund continued to be in the first position with AUM of Rs 71093.71 crore but recorded the outflow of Rs 15400 crore in its AUM on October 2008 comparing to the month of September 2008, which witnessed highest outflow in this month. HDFC MF retains the second position, but it sheds by 12.54% in its AUM to Rs 45479.37 crore. ICICI Prudential was the next looser with outflow of Rs 10590 crore (21.28%) in AUM to Rs 39182.45 crore.

The other top mutual funds, in term of AUM, UTI has recorded the deep fall of 14.21% to Rs 38283.63 crore. Birla MF also recorded the fall of 9.02% in its AUM (Rs 34187.29 crore) and SBI MF sheds by 15.45% to Rs 24727 crore.Reliance MF recorded the highest outflow of Rs 15400 crore (17.80%) in its AUM and the ICICI Prudential followed it with outflow of Rs 10590 crore (21.28%) in October the month of September 2008.

In the category of Fund houses maintaining AUM more than Rs 10000 crore, Franklin Templeton MF has recorded the highest outflow of Rs 6352.15 crore to Rs 22003.86 crore in the month of October over the September 2008. Kotak Mahindra with Rs 3896 crore (20.71%) fall, Tata MF with Rs 3777.88 crore fall followed FT.

The funds with relatively smaller corpus having AUM less than Rs 1000 crore has registered the sharp fall in AUM, Mirae Asset MF registered 56.52% fall in its AUM (Rs 1004.18 crore), AIG Global Investments Group declined by 44.18% to Rs 1688.92 crore in its AUM and Baroda MF registered an outflow of 44.04% to Rs 42.87 crore of AUM in the month of September compared with the month of August 2008.

Realising the fund crunch being faced by MFs, the Reserve Bank of India has provided liquidity support to MFs through banks. The Indian Banks Association has opened a special counter to assist mutual funds facing redemption pressure.