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Mutual Funds see drop in assets: Redemptions?

Top fund houses see major drop in AUM in November:

…according to Amfi, assets under management (AUM) of Indian mutual funds continued to shrink in November, extending the downtrend for the third consecutive month. Total assets at the close of the month stood at Rs 4,02 crore, down 7% from October.

That’s a net loss of 30,000 cr. Now equity funds were about 120,000 cr. in October, and the indices have fallen about 8%, and if we assume a 10% fall in the NAV on average, we will see a loss of 12,000 cr. just because the markets have dropped.

The rest of the 18,000 cr? It’s likely to be redemptions, which is over and above fresh investments, SIPs and such. People are running out of mutual funds like never before? And this is probably going to be seen by all kinds of funds – Debt and Equity.

One thing though – Gilt funds had seen an increase in assets from 4000 to 5000 cr. in October. Once AMFI provides a monthly update we’ll see what’s happened (the monthly consolidated update is not yet up).

Mutual fund redemptions are one side of the story – but they are definitely buying in the markets, as evinced by daily statistics on the NSE. I think it’s a false rally of sorts – dwindling assets, brave purchases….something has to give.

Update 1: Money Today has it that SIPs are being discontinued: Fear and loathing on MF Street (Hat tip and thanks to an anonymous commenter)

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