Market meltdown hits small & mid-size AMCs the most

The equity market meltdown has hit the assets under management (AUM) of the small and mid-size fund houses more than the major asset managers in the first half of calendar year, 2008 (H1CY08).

Better asset management and healthy exposure to the debt market have helped the bigger players, except UTI Mutual Fund, to jack up their AUMs during this period.

The erosion in the value of equity assets of small and mid-size asset management companies (AMCs) took place in the range of 2% to 61% whereas the bigger mutual fund (MF) players? AUM has risen in the range of 8% to 29%.

A sizeable exposure to the debt market has helped the MFs to post marginal growth in its AUM as it has inched up by 2.27% or Rs 12,239 crore to Rs 5,50,674 crore. Against this the 30-share Sensex of the Bombay Stock Exchange (BSE) has dipped by 34% or 6,825 points in the first six months of CY08.

Among the smaller AMCs, the AUM of Quantum Mutual Fund eroded the lowest by 1.74% or Rs 1.17 crore and stood at Rs 67 crore as on June 30, 2008. The AUM of the Benchmark Mutual Fund saw the highest erosion in its assets at 61% or Rs 4,258 crore and stood at Rs 2,641 crore during the same period.

Similarly, the mid-size AMCs have witnessed an erosion in their assets in the range of 7% to 26%. The AUM of JM Financial Mutual Fund dipped by 7.17% or Rs 899 crore at Rs 11,655 crore and Fidelity Mutual Fund?s AUM dipped by 26% or Rs 2,916 crore at Rs 8,104 crore during the period.

Commenting on the development, Waqar Naqvi, CEO, Taurus Mutual Fund said that rising oil and food prices in the global market have hit the world and domestic equity markets. ?The equity meltdown in the wake of rising inflation has its negative impact on the stock markets across the globe, which has also eroded MFs? equity assets.?

However, the bigger fund houses like Reliance Mutual Fund and ICICI Prudential Mutual Fund could maintain their AUM growth in positive zone also with the help of their debt market exposure.

Reliance Mutual Fund?s AUM went up by 12.42% or Rs 10,034 crore at Rs 90,813 crore and ICICI Prudential Mutual Fund gained 4.76% or Rs 2,701 crore in its AUM at Rs 59,473 crore.

The highest growth in AUM was seen by Birla Sun Life Mutual Fund, which grew 29%, or Rs 9,256 crore to Rs 41,075 crore. However, the AUM of UTI Mutual Fund, with comparatively more exposure in equities, has lost 10.70% or Rs 6,083 crore at Rs 50,770 crore during this period.

Another senior fund manager from a domestic fund house said that the AMCs having more exposure to the equity market and less deployment of money in the debt market were hit badly. ?Of course, prudent asset management also plays a vital role in maintaining the AUMs in turbulent times,? the fund manager said.