Industry update: MF sales hit by abolition of entry load

Industry update: MF sales hit by abolition of entry load

Mutual Funds (MF) see 9% growth in assets, the MF industry breached the Rs7-lakh-crore mark in assets in August 2009. The industry’s total assets under management (AUM) grew by Rs59,965.79 crore, or 8.69%, during the month.

At the end of August, investors poured in funds worth Rs32,673 crore, down from Rs123,679 crore at the end of July. The equity funds investing in stocks saw net outflow of Rs142 crore. Investments in MFs had slumped substantially in August, with the industry witnessing a net fund inflow of over Rs32,600 crore, a 74% decline on a month-on-month basis.

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The abolition of entry loads on equity MF schemes has sharply hit sales of equity schemes in the very first month of the new rule coming into effect. Equity assets recorded a net outflow to the tune of Rs142 crore in August despite a 5% increase in the overall industry’s AUM to Rs7 lakh crore.

Thus, the share of equity assets in the total industry AUM has slipped further to 24%, including equity linked saving schemes (ELSS), from over 25% of assets until the last month.

The Securities and Exchange Board of India (Sebi) has asked all MF companies to get their systems audited at least once in two years and submit the reports to the market regulator.

The regulator said that considering the importance of systems audit in the technology driven asset management activity, it has been decided that MFs shall have a systems audit conducted by an independent CISA/CISM qualified or equivalent auditor.