Page 19 - Banking Finance September 2020

MUTUAL FUND

wrongdoings, including insider trading, appears that a lot was going on in the assets base beating the average
by the key management personnel of back-end. If something is too good to industry's growth of 12 percent.
Franklin Templeton Asset Management be true, you need to look under the According to Vidya Bala, co-founder of
(India). hood. This holds not just for investors,
Primeinvestor.in, market rebound
Certain key officials of the fund had but even the board and trustees." caused the growth in the industry's
redeemed their personal investments On April 23, 2020, Franklin Templeton AUM on a quarter-on quarter basis.
just before the formal announcement wound up six debt schemes that were
"Otherwise steady outflows from eq-
of the closure of six debt schemes and meant for high-yield investments, with uity funds is a sign of lack of confidence
made money during that time, the a total asset under management of
in funds by retail investors. The uncer-
audit report by Choksi & Choksi pointed over Rs 25,000 crore. The company tainty caused by COVID-19 has also
out. cited inadequate liquidity in the debt
prompted investors to redeem and
According to sources, "capital markets market as a reason. keep assets in cash," she added.
regulator Sebi may look into these re- The forensic audit pointed that the
Omkeshwar Singh, Head RankMF at
demptions from the perspective of in- firm invested heavily in unlisted debt Samco Securities, said the AAUM of
sider trading regulations." securities, which were mainly illiquid.
September quarter is higher compared
The fund is currently facing several Some of those companies were newly to June quarter majorly due to appre-
incorporated.
court cases and investigations, includ- ciation in value of existing holding in
ing one by Sebi, for allegedly closing six equity oriented funds -- rise on the
schemes in an abrupt manner. Mutual Funds industry as- equity markets.
The Choksi & Choksi report indicates sets base rise 12% to Rs "In the debt side, there has been in-
that the fund gave favours to certain 27.6 lakh crore in Septem- cremental inflows of nearly Rs 1 lakh
companies it had invested in by not crore and mostly in July 2020," he
exercising the put option, despite the ber quarter added.
suggestions given by the risk manage- Mutual fund industry's asset base rose
ment committee to its Chief Invest- by 12 percent to Rs 27.6 lakh crore SBI Mutual Fund, which continues to
ment Officer to do so. during the September 2020 quarter, be the largest fund house in the coun-
try, saw its asset base growing 15.6
A put option is a contract that gives its primarily on account of rebound in percent to Rs 4,21,364 crore. It had an
holder the right to sell a number of markets.
average AUM of Rs 3,64,363 crore in
equity shares at a pre-determined The average asset under management the preceding quarter.
price, called the strike price, before the (AAUM) of the industry, comprising 45
option's expiry. players, was at Rs 24.63 lakh crore in HDFC MF saw its asset base rising by
As per the report, fund managers were April-June quarter this year, according 5.4 percent to Rs 3,75,516 crore dur-
ing the period under review, from Rs
inconsistent in exercising the put op- to data by Association of Mutual Funds 3,56,183 crore in the June quarter.
tion. With some companies, they ex- in India (Amfi).
ecuted it, but with some others, they All top 10 fund houses -- SBI MF, HDFC ICICI Prudential MF posted an average
didn't, despite a major downgrade MF, ICICI Prudential MF, Aditya Birla AUM of Rs 3,60,049 crore in Septem-
from category A to category D grade Sunlife MF, Nippon India MF, Kotak MF, ber quarter, against Rs 3,26,291 crore
in less than a year's time. Axis MF, UTI MF, IDFC MF and DSP MF in June quarter, indicating an increase
Rules permit fund managers to ex- -- witnessed an increase in their respec- of 10.3 percent.
ecute the put option when invest- tive average AUMs during the Septem- Aditya Birla Sunlife MF and Nippon In-
ments are downgraded by credit rat- ber quarter. dia MF have seen their average AUM
ing agencies. Notably, Axis MF, UTI MF, SBI MF and growing by 11 percent each to Rs
Amit Tandon, Managing Director, IIAS Kotak MF have witnessed an increase 2,38,674 crore and a little over Rs 2
Proxy Advisory, firm told: "Clearly, it in the range of 14-16 percent in their lakh crore respectively.

BANKING FINANCE | SEPTEMBER | 2020 | 19