Money markets’ scare cause Rs 1.2 lakh fall in September liquid fund AUM

By: | Published: October 17, 2018 12:17 AM

Liquid and money market funds witnessed a fall of assets under management (AUMs) worth Rs 1.25 lakh crore in September over the previous month, showed data from Value Research.

Liquid funds AUM falls Rs 1.2 lakh crore in September

Liquid and money market funds witnessed a fall of assets under management (AUMs) worth Rs 1.25 lakh crore in September over the previous month, showed data from Value Research.

The liquid schemes saw an AUM of Rs 4.5 lakh crore in September, compared to Rs 5.7 lakh crore in August. While AUM of money market schemes stood at Rs 33,570.86 crore in September as against Rs 38,697.52 crore in August.

These schemes had seen outflows of over Rs 2.11 lakh crore in September. Liquid schemes that saw most fall in their AUMs in September are Reliance Liquid Fund, UTI Liquid Cash and ICICI Liquid Fund. Put together, these three funds accounted for about 30% of the total fall in AUM of `1.2 lakh crore last month, the Value Research data showed.

Market participants say that liquidity scare in the money markets in the wake of the financial crisis at IL&FS and the inability of a couple of mutual funds to sell NBFC (Non Banking Financial Companies) paper had made investors nervous. While companies withdrew money from mutual funds in September to pay advance taxes, the relatively tight liquidity in the money markets has hurt investor sentiment.

Reliance Liquid Fund had an AUM of `51,485.91 crore in August, which went down to `39,358.64 crore in September a fall of 23.6%. While AUM of UTI Liquid Cash Regular plan stood at `33,476 crore in September, a fall of `12,061 or 26.5%.

“The last few days of September saw fear in the debt market after IL&FS crises. Banks and corporates also have removed money last month, but outflows was also result of investor sentiment which turned negative,” said a fund manager of a leading fund house.

Liquid funds invest in debt and money market securities with maturity of up to 91 days only.

Outflows from mutual funds in September stood at `2.30 lakh crore with investors moving money out of liquid or money market funds. The industry’s AUM was `22.04 lakh crore, a fall of 12.5% over `25.20 lakh crore in August, data from Association of Mutual Funds in India (Amfi) showed.

Apart from the liquid funds, income and gilt funds also saw outflows of `32,504 crore and 968 crore respectively, in September. Not only liquid funds, but even money markets funds saw fall in their AUM to the tune of `5,126 crore in September.

LIC Liquid Fund and Principal Cash Management were few of the schemes where their AUM fell by around 50% in September. Out of big fund house, only HDFC Liquid fund saw rise in their AUM in September.

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