The Association of Mutual Funds in India (AMFI) has said that it would declare the average asset under management (AAUM) of the mutual fund Industry on quarterly basis instead of the current practice of declaring it on monthly basis.
AMFI on its website has put up a statement saying that "The AAUM for each quarter (90 days average) will be computed and uploaded on AMFI Website on the first working day of the following month of every quarter, effective from quarter ending December 31, 2010."
This mean the industry body will not declare the monthly AAUM data starting from October 2010.
There has been a demand from a majority of fund houses to stop declaring monthly AAUM as it gave wrong picture of the industry assets.
A large portion of the mutual fund industry's assets is accounted by institutions, who park their surplus cash for short periods, often as short as a few days, in debt funds. This combination of large size, and large & frequent investments and redemptions means that the impact of institutional transactions overshadows the trends in retail segment.
Around 75 per cent of the total mutual fund industry AUM comes from banks and corporate houses, who park their surplus cash in liquid and liquid plus funds.
It has been observed that in quarter-ending months, institutions pull out of mutual funds resulting in sharp drop in average AUM of the industry in those particular months.
