>Analysis of Equity Moves by Mutual Funds in March 2010 (HDFC SECURITIES)

This note analyses the equity moves in March 2010 by Mutual Funds having month-end equity corpuses of more than Rs. 2,000 cr (except Fidelity Mutual Fund whose portfolio for February 2010 was not available). The source of data for this analysis is NAV INDIA, who in turn takes into account the monthly-declared portfolios of the respective schemes wherever available (excluding offshore funds, FMPs and new fund offers). NAV INDIA at times revises data for past periods depending on the need thereof.

AMFI disseminates the data about mutual funds on a monthly basis based on the monthly average AUMs declared by the Mutual Funds while NAV India calculates the data based on month end AUMs. Hence the analysis and findings based on these two may not match.

Summary: Total AUM fell 15.5% in March 2010 over February 2010 to Rs. 6,41,866 cr. This fall is mainly on account of massive outflows (in terms of percentage) in the bond funds, liquid funds, index funds and FOF segments. Only 8 of the 36 fund houses that have disclosed their assets under management (AUM) figures for March 2010 have seen a rise in assets compared with the previous month. Even though the benchmark indices saw a growth of over 6% during March 2010, the AUMs fell as banks and corporates withdrew mainly from fixed income funds to pay off their advance tax payments. Banks also withdrew funds from mutual funds to shore up their year-end credit growth numbers. This happens during every fiscal year-end. Another reason for the decline has been the large dividend payouts by the mutual funds during the month. The Bond Funds saw a fall of 26% and Liquid Funds and Index funds, fell by -14% and 12% respectively. FOF fell by 13% in March 2010 after a 10% rise in February 2010. According to figures released by the Reserve Bank of India in its weekly statistical supplement, banks' investments in mutual funds stood at Rs 55,503 crs in the last fortnight of March 2010 as against Rs 1,09,453 crs as on February 26, 2010 as against Rs 1,47,279 crs on December 18, 2009.

The Equity Diversified funds showed a marginal rise of 1% in their corpus for the month of March 2010 mainly due to the increase seen in the benchmark indices during the month. Gilt Funds rose the maximum by 7% followed by Tax Planning Funds, which rose by 5% during March 2010 (to benefit out of the tax reliefs by investing before the fiscal year end). As per SEBI data, mutual funds were net sellers of Rs 3, 809 crs worth equity shares during the month of March 2010 in the secondary markets.

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