The redemption by banks in the wake of hardening of short term interest rates brought the asset under management (AUM) of the Indian mutual fund (MF) industry down by 3% in November.

According to the Association of Mutual Funds in India (Amfi), the AUM of the MF industry stood at Rs 5,37,943.12 crore in November, down by Rs 18,786.57 crore or 3.37% as against Rs 5,56,729.69 crore AUM in October.

Sameer Kamdar, country head MF, Mata Securities, said, ?The dip of AUM can be primarily attributable to the fact that call rates hardened to over 7.50% by the middle of November leading to the redemptions from liquid schemes especially by the banks.?

The market leader in terms of AUM, Reliance MF?s (RMF) AUM fell by 2.76% or Rs 2,209 crore to Rs 79,973.83 crore.

A RMF official said that it witnessed outflows from its short-term debt schemes, especially liquid and liquid plus plans, resulting in the asset base erosion.

In November, the domestic equity market was down by around 2% totalling mark-to-market AUM loss of around Rs 3,500 crore.

?But this loss was partly negated by the collection in the four equity New Fund Offerings (NFOs) which cumulatively collected around Rs 3,435 crore in November,? Kamdar added.

The four NFO?s, which were included in the November corpus, were Birla Sunlife International Equity Fund mobilising Rs 700 crore, Tata Indo-Global Infrastructure Fund mobilising Rs 2,500 crore, Lotus India Infrastructure Fund of Rs 220 crore and Sahara REAL Fund mobilising Rs 15 crore.

R Rajagopal, CIO, DBS Chola MF opines that the other reason for the dip in the AUM was because of the flat growth of fixed maturity plans (FMPs). He said, ?November saw a lot of FMP series either being closed or not getting rolled over. This also affected the fall in the AUM.?

A total of 36 FMPs were launched in November as against 35 FMPs in October. Also the yields on quarterly FMPs hardened with 90 days FMPs returning around 8.60%-9.00% in November as against 7.95%-8.00% in August 2007.

DBS Chola MF?s AUM dipped the most. Its AUM fell by 28.85% or Rs 1,489.18 crore to Rs 3,672.91 crore.