The surge in the rate of inflation took its toll not only on the Indian equity market in the month of June, but it also impacted the Indian mutual fund (MF) industry as its assets under management (AUM) during the month declined by 7.36% or Rs 44,163.15 crore to Rs 5,56,103.17 crore from the May level of Rs 6,00,266.32 crore.

Analysts attribute this fall in the AUM to volatile Indian equity markets on the back of surging global crude prices in the international market resulting in higher levels of domestic inflation.

According to figures released by the Association of Mutual Funds in India (Amfi), despite losing over 7.74% or Rs 7,617.48 crore, Reliance MF remains at the top of the heap, with its AUM at Rs 90,813.45 in June compared to Rs 98,430.93 crore in May. ICICI Prudential MF gained 0.70% or Rs 413.56 crore in its AUM at Rs 59,473.58 crore compared to Rs 59,060.02 crore in May.

Sameer Kamdar, national head-mutual funds at distributor Mata Securities said, ?I think this is for the first time that I am seeing such a fall in AUM. The major reason for this sudden drop in AUM is the volatile equity markets. There were other factors too, such as payment of advance tax in the month of June and rising inflation, due to which there has been this decrease in the AUM of the MF industry.?

UTI MF also saw its AUM fall by a hefty 7.10% or Rs 3,881.11 crore at Rs 50,770.56 crore, compared to Rs 54,651.68 crores in May. HDFC MF registered a decline of Rs 3,396.48 crore or 6.05% at Rs 52,710.80 crore compared to Rs 56,107.29 crores in May.

However, Dhirendra Kumar, CEO, Valueresearchonline had a different view of the decline in AUM. Said Kumar, ?In June, equity markets were completely jittery, due to which we have seen this fall in the AUM. But I don?t think that this is a big decline, if we compare it with the Sensex which lost around 15%.?

Kumar also added, ?For the next few weeks, the markets are going to be flat and I don?t see any big surge as we may have seen large money being mobilized through new fund offerings (NFOs) in the recent past. But that trend may not continue as there are no major NFOs in the coming weeks.? K Ramakumar, Head-fixed income, Sundaram PNB Paribas Mutual Fund said, ?In the month of June we have seen some dryness in liquidity which has led to a fall in the AUM of the MF industry.?