Domestic fund houses, which are yet to recover from huge redemptions in October, will have to gear up for another round of outflow in the New Year.
Mutual funds are set to witness a fresh round of redemption of Rs 36,848 crore (Rs 368.48 billion) between December 2008 and March 2009, with many of their debt schemes such as fixed maturity plans, quarterly and monthly interval plans, fixed horizon plans and money market-related schemes set to mature during the coming months.
According to the data gleaned from the Association of Mutual Funds in India, about Rs 36,848 crore (Rs 368.48 billion) will flow out of 720 funds as the schemes will mature between December 2008 and March 2009.
Of the 720 schemes, 102 will feel the pinch, with more than Rs 100 crore (Rs 1 billion) flowing out from them, aggregating a total redemption of Rs 25,600 crore (Rs 256 billion). Another 501 schemes will see a total redemption of Rs 11,200 crore (Rs 112 billion) in the range of Rs 1 crore (Rs 10 million) to Rs 100 crore (Rs 1 billion) each, while 81 schemes will see redemption of less than Rs 1 crore (Rs 10 million) each.
In December, redemption as a result of maturity of debt and money market schemes will amount to around Rs 15,000 crore (Rs 150 billion), while redemption in January will be to the tune of Rs 6,000 crore (Rs 60 billion).
February is set for another round of huge redemption, with around Rs 13,000 crore (Rs 130 billion) flowing out of the mutual fund industry, mainly from the maturing quarterly interval plans launched in November.
Domestic fund houses would like to forget 2008-09 as they witnessed their assets under management decline by Rs 1,89,898 crore (Rs 1,898.98 billion) between April and November this year. The drop was mainly attributed to the global financial turmoil, leading to a liquidity crunch and prompting investors to pull their money out of mutual fund schemes.
However, the Amfi data show that nearly 84 per cent or Rs 25,097 crore (Rs 250.97 billion) of redemptions in September and October - the worst months for fund houses - were as a result of the schemes maturing during those days.
The AUM of fund houses fell by Rs 1,89,898 crore from Rs 5,95,010 crore (Rs 5,950.10 billion) as on April 30 to Rs 4,05,112 crore (Rs 4,051.12 billion) as on November 30, mainly due to value erosion in their equity, income and gilt portfolios.
According to Amfi data, debt and money market funds, which account for about 71 per cent of the total AUM, witnessed huge redemption in September and October as most of these funds matured during the period.
Debt schemes witnessed a steady uptrend between April and August this year, with their AUM moving up from Rs 2,56,877 crore (Rs 2,568.77 billion) to Rs 2,70,353 crore (Rs 2,703.53 billion) during the period.
However, following Lehman Brothers' bankruptcy and the AIG bailout by the US government, the global financial market witnessed a liquidity crunch since September 17. Domestic mutual funds saw huge redemption in September and October, with assets of debt funds declining to Rs 1,92,838 crore (Rs 1,928.38 billion).