The mutual fund industry reported a 4 per cent increase in average asset under management to Rs 6.92 lakh crore in the April-June quarter, a Crisil research report said. The average AUM stood at Rs 6.65 lakh crore in the same quarter of 2011-12.
Debt-oriented funds, especially money market funds, saw the highest gain in assets across categories, up 11.5 per cent to Rs 1.64 lakh crore in the June quarter, forming 24 per cent of the industry assets, the report said. It said assets of money market funds or liquid funds grew by Rs 16,900 crore, ultra short-term debt funds by Rs 6,900 crore, fixed maturity plans (FMPs) by Rs 2,900 crore and other debt-oriented funds by Rs 5,800 crore over the past quarter.
However, equity funds witnessed a decline of Rs 5,300 crore in AUM owing to weak sentiments prevailing in the asset class in the quarter gone by. Crisil pointed out that nine out of 44 fund houses post rise in average AUM, with Birla Sun Life Mutual Fund reporting the highest rise in absolute terms. In terms of asset size, HDFC Mutual Fund maintained its top position by asset size at Rs 92,600 crore in the June quarter; its assets rose by 3.1 per cent, and Reliance Mutual Fund followed with assets of Rs 80,700 crore (up 3.3 per cent). In another development, in order to promote the sagging mutual fund industry, the finance ministry may advise market regulator Sebi to consider re-introducing commission for brokers, known as entry load. "We will meet representatives of mutual fund industry and Sebi officials and will advise them to consider measures including re-introduction of entry load to revive the fortunes of mutual fund industry," a senior finance ministry official said.
Entry load -- up to 2.25 per cent commission paid to distributors of mutual funds -- was banned in 2009 by former Sebi chief CB Bhave, who felt that investors were being taken for a ride by distributors who encouraged investors to churn their portfolios.
The MF industry has also pitched for raising expense ratio, which includes administrative fee and marketing cost, by 25 basis points. Besides, it has also made a case for doing away with the sub-ceilings under the expense ratio and pass on the burden of 12 per cent service tax to investors. Further, the industry wants to shift the burden of service tax on buyers. “Service tax should be borne by investors and should be kept out of the total expense ratio,” Association of Mutual Funds of India or Amfi CEO HN Sinor said.
