The scheme's closing AUM as on December 31, 2017, stood at Rs 6,243 crore from Rs 9,319 crore as on November 30, 2017
Bharat 22 ETF, which received the highest subscription for any new fund offer in the history of Indian mutual fund industry, has seen its assets drop by over Rs 3,000 crore or roughly 33% in just one month, as a section of rich but short-term investors pressed the redemption button.
Just like the gargantuan level of funds mopped up by the ETF, the level of asset drop in one month has no parallel in the MF history. The asset drop seems extremely substantial if compared with the total assets of some of the small fund houses who individually don't even manage Rs 3,000 crore across all their schemes.
As per data contained in the fact-sheets of ICICI Prudential AMC, which managed the Bharat 22 ETF, the specific scheme's closing AUM (assets under management) as on December 31, 2017, stood at Rs 6,243 crore from Rs 9,319 crore as on November 30, 2017. Large redemptions by a section of Bharat 22 ETF investors, probably corporates, is the major reason for this jaw-dropping decline, said sources.
This ETF is a part of Government of India's overall disinvestment programme. Through the ETF, ICICI Prudential AMC proposed to raise an initial amount of Rs 8,000 crore. The government finally decided to retain Rs 14,500 crore, after getting bids worth at over Rs 31,000 crore for the ETF. The fall in fund assets seems much larger, over 50%, if one compares the latest figure of Rs 6,243 crore with the Rs 14,500 crore raised at first.
The Bharat 22 ETF's new fund offer, which had opened in mid-November, was hard-sold by fund industry distributors. There was a discount of 3% being offered to all categories of investors - anchor investors, retail individual investors, retirement funds, qualified institutional buyers and non-institutional investors.
Explaining the sharp drop in assets, a spokesperson of ICICI Prudential AMC told DNA Money, "ICICI Prudential AMC-managed Bharat 22 ETF saw a wide participation from across the investment categories, including retail investors. As of December 2017, only 0.6% of the number of applicants have redeemed their investments. We continue to believe that the index composition offered by Bharat 22 ETF remains one of the most unique and an attractive proposition, allowing the investors to own the corporate jewels of the country."
Some fund industry executives say that the Bharat 22 ETF's strategy of giving 3% discount to all categories of investors and 25% allotment percentages for each category of investors, coupled with short-term listing gain mentality amid positive equity markets attracted short-sighted investors.
On its listing day i.e., November 28, the Bharat 22 ETF opened at Rs 36.30 and closed the session at Rs 37.33. Thereafter, it has remained at similar levels.
MASSIVE FALL
- The scheme's closing AUM as on December 31, 2017, stood at Rs 6,243 crore from Rs 9,319 crore as on November 30, 2017
- Large redemptions by a section of Bharat 22 ETF investors, probably corporates, is the major reason for this jaw-dropping decline
- ICICI Pru AMC had proposed to raise Rs 8,000 crore. The government finally decided to retain Rs 14,500 crore, after getting bids worth at over Rs 31,000 crore
- The fall in fund assets seems much larger, over 50%, if one compares the latest figure of Rs 6,243 crore with the Rs 14,500 crore raised at first
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Bharat 22 ETF")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}