IL&FS jitters erode 12.5% of MF assets; AUM shrinks to Rs 22 trn in Sept

The crisis linked to Infrastructure Leasing & Financial Services (IL&FS) has hit the mutual fund (MF) industry hard, with 12.5 per cent, or Rs 3.16 trillion, of industry assets getting shaved off in a single month. Total assets under management (AUM) shrunk to Rs 22.04 trillion in September from Rs 25.2 trillion at the end of August.

Most of the damage was due to record outflows from liquid and fixed-income schemes, where large investors invested. The two schemes saw outflows of Rs 2.4 trillion in September — the most since at least January 2008. The pullout in debt market schemes alone accounted for close to 10 per cent of August’s AUM tally.

Industry participants attribute the sharp pullout to nervousness among corporate investors following the IL&FS default, which had quasi-sovereign status. The large amount of outflow has caught the industry by surprise. Industry had earlier estimated outflows in such schemes at around Rs 1 trillion.