US crisis hits equity funds, AUM down Rs 712 crore in September

Jai Kumar N R

New Delhi, Oct 8: The US catastrophe has played havoc with the equity funds as their assets under management (AUM) has plunged by Rs 712 crore in the month of September. Fund managers are also caught in a piquant situation as on one hand they are facing redemption pressures from panicky investors and on the other, there has been hardly any fresh inflows.

The sharp fall in their AUM has been due to a crash in equity prices and panic exiting from equity funds. There could be more erosion in their assets as the market may remain volatile in the short-term, fund managers warn. Of the 78 equity funds, as many as 73 have seen their AUM plunge during the month. Interestingly, the only equity fund which has shown positive growth in its asset base is Pioneer ITI Index Fund. Its asset base has risen from Rs 2.9 crore as on August 30 to Rs 4.86 crore, a growth of 67.59 per cent. While Dundee Taxsaver has neither lost nor gained in its asset base during the month, Sun F&C Resurgent India is yet to declare its assets for September.

Alliance Equity, a diversified equity fund, tops the list of losers with a Rs 72-crore erosion in its asset base. The sector-specific technology funds are the worst hit which has been in line with the hammering received by software stocks during the past one month. Technology funds like Pioneer ITI Infotech (Rs 69 crore loss), Alliance New Millennium (Rs 65 crore), Pioneer ITI Internet Opportunities Fund (Rs 54.73 crore), Prudential ICICI Technology (Rs 41 crore), K Tech (Rs 14.44 crore), Chola Freedom (Rs 10 crore) and IL&FS eCom (Rs 8.41 crore) figure in the list of top 20 losers. ING Growth Portfolio, a diversified equity fund, has seen an erosion of Rs 15.38 crore in assets thanks mainly to its high exposure to technology stocks.

Some of the other losers include big boys of the mutual fund industry like Birla Advantage (Rs 26.31 crore), Pioneer ITI Bluechip (Rs 48 crore), Prudential ICICI Growth Plan (Rs 45.98 crore) and Magnum Multiplier Plus (Rs 22.38 crore).

Thanks to the volatility in the stock markets, fund managers seem to be playing it safe. Fund houses are maintaining high cash positions and their leeway to churn portfolio is limited thanks to the lack of fresh inflows. Says Taurus Mutual Fund CEO RK Gupta: "We have build up our cash position up to 10 per cent. This is partly due to the redemption pressures and partly due to the panic created by the US crisis."