personal finance

Investors prefer less risky mutual fund houses now


Mutual fund inflows into debt schemes have revived since the exodus post IL&FS crisis, but the beneficiaries this time are different as investors choose institutions which are perceived to be less risky.

HDFC Mutual Fund and SBI Mutual Fund have been the gainers over the past five months as corporates poured into their liquid schemes while UTI Mutual Fund, Reliance MF and Aditya Birla MF, Tata MF have lost customers, data from Crisil shows.

HDFC Asset Management Co is the biggest beneficiary of such changing investor behaviour with the fund house gaining 28% in assets under management (AUM) between August last year and March this year. Its AUM is now at ₹63,423 crore on March-end compared with ₹49,303 crore in August-end last year.

“It is a prudent management, which could escape IL&FS fallouts,” said Vikram Dalal, founder at Synergee Capital, a Mumbai-based advisory firm. “Corporates now seek the perceived safety of investment to park money in liquid funds as IL&FS crisis has inflicted an element of fear.” “But, the scene will be back to normal where investors would chase yields on investment,” he said.

SBI Mutual Fund reported about 13% rise at ₹56,086 crore in liquid fund assets between August-end and February-end. But, it pared its gains with AUMs shrinking below the pre-crisis levels. At the time when the IL&FS crisis emerged, HDFC Liquid Fund was among the few funds with no exposure to these stressed entities, experts said. A series of defaults by IL&FS sparked off panic in the market with investors turning extremely cautious.

“Corporate board members were comfortable investing in HDFC Liquid Fund for its well-guarded position and brand strength,” said a senior executive from large research house. These trends in the fund movement reflect a flight to safety for corporates, the person said.

Companies mostly park short term money in liquid schemes earning interest income more than any bank deposit schemes.

UTI Mutual Fund would be the worst hit as the UTI Liquid Cash Plan (regular-growth) lost 47% of its AUM in liquid fund schemes to ₹24,244 crore on March-end. It was at ₹45,536 crore on the month before the crisis of capital had hit NBFC in September last year. Similarly, Reliance Liquid Fund – Growth plan has seen its AUM sliding 41 during the same period.

Month-end AUM (Rs in millions)

Scheme name March 2019 Feb 2019 Aug 2018
HDFC Liquid Fund – Growth 634,233 693,965 493,034
Kotak Liquid – Regular Plan – Growth 249,135 350,860 272,692
ICICI Prudential Liquid Fund – Growth 458,419 593,543 592,082
Aditya Birla sun Life Liquid Fund – Regular – Growth 427,215 575,483 590,991
Axis Liquid Fund – Growth 210,280 280,098 300,646
SBI Liquid Fund – Growth 335,416 560,862 497,321
Tata Liquid Fund – Regular Plan – Growth 160,894 249,051 244,583
Reliance Liquid Fund – Growth 302,717 411,881 514,859
UTI Liquid Cash Plan – Regular Plan – Growth 242,441 402,989 455,368
DSP Liquid Fund – Regular Plan – Growth 101,294 155,796 260,259

Source: Crisil





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