The mutual fund industry saw a decline in the total asset under management (AUM) for the second consecutive month. As per the data released by AMFI, no fund house other than Birla Sun Life Mutual Fund witnessed a rise in their AUMs for March. This saw the total AUM for the industry down by Rs 50,482 crore in the month of March, a fall of 8.9 per cent (excluding the AUM figure of JM Financial Mutual Fund, which had an AUM of Rs 13,534 in February). The three biggest losers on average AUM this month were Canara Robeco (-42 per cent), Benchmark (-33 per cent) and DBS Chola (-25 per cent).

According to UTI Asset Management chief marketing officer Jaideep Bhattacharya, “It is a result of a combination of several factors. The prime reason was the liquidity crunch as the advance tax moved out of the system in March and also, banks don’t keep their money with fund houses in March. The sentiments in the market also kept equity investors away.”

While market sentiments don’t seem to be reviving, factors specific to March are bound to get revived. According to SBI Mutual Funds managing director and CEO Syed Shahabuddin, “The common factors of advance tax and banks money that suck the liquidity are specific to March and they will settle down as the money will come back into the system in the first week of April. Hence, the only major factor impacting currently is the market movement.”

If we look at March every year, there is a dip in the growth of AUM size. In the year 2007, the AUM for March also remained stable in a buoyed equity market. The AUM for March 2007 rose insignificantly by 0.2 per cent over its previous month, while in February 2007 the average AUM rise was of Rs 18,631 crore or 5.5 per cent over January.

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