Credit risk category mutual funds saw a steady decline in their assets under management last fiscal as the AUM decreased from INR 81,000 Crs at the beginning of FY 20 to almost INR 55,000 Crs by the end of the fiscal year. The Franklin fiasco exacerbated the trend and the AUM fell sharply to INR 36,000 Cr by end of April and further fell to INR 30,000 Cr by end of May.
However, in what would be as a sigh of relief for the fund industry – the redemptions, though still there, have slowed down significantly in June. The same is evident in below graph.
The crisis however has left many funds severely bruised. Four funds now have AUM less than 100 Cr.
Amongst the larger ones (with AUM more than INR 500 Cr as on March 31, 2020), the funds that have seen most redemptions this fiscal include:
| AMC | AUM in Crs as on 31.03.2020 | Percentage AUM Decline this fiscal till 23rd June |
|---|---|---|
| L&T | 1,421 | 75.85% |
| DSP | 1,126 | 66.28% |
| ABSL | 4,645 | 59.09% |
| Kotak | 4,804 | 58.24% |
| HDFC | 13,812 | 54.32% |
SBI MF AMC’s Credit Fund on the other hand has seen the least redemptions at only ~20%.
We had earlier covered structural issues that Credit Risk focussed Mutual Funds will face in an illiquid bond market like India, the same can be accessed below.
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