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Mutual fund assets cross Rs 12 lakh cr, equity shines

The Indian mutual fund industry’s assets under management crossed the Rs 12 trillion mark in February, ending at 12.02 trillion, according to the monthly numbers released by the Association of Mutual Funds in India (AMFI). This is the first time the industry’s assets have crossed the Rs 12 trillion mark. Gains were led by inflows into equity, balanced, gilt and liquid funds.

Mutual Fund Category
Net Inflow/ Outflow (Rs bn)
Month-end AUM (Rs bn)
Feb-15
Jan-15
2015 Total
Feb-15
Jan-15
Difference
Income Funds
-1.52
121.63
120.11
5223.66
5202.34
21.32
Infrastructure Debt Funds
0.00
0.00
0.00
11.69
11.60
0.09
Equity Funds*
58.40
63.24
121.64
3457.39
3409.36
48.03
Balanced Funds
12.35
8.35
20.70
265.07
257.92
7.15
Liquid / Money Market Funds
87.84
858.48
946.32
2760.70
2653.58
107.12
Gilt Funds
20.58
18.13
38.71
131.80
110.75
21.05
Gold ETF Funds
-0.74
-1.31
-2.05
68.44
72.45
-4.01
Other ETFs
7.52
1.28
8.80
77.95
70.56
7.39
Fund of Funds Investing Overseas
-0.78
-1.02
-1.80
25.26
25.00
0.26
Total
183.65
1068.78
1252.43
12021.96
11813.56
208.40

 

The strong performance by the stock markets in recent months helped equity funds attract net inflows (Rs 58.40 bn) for the tenth consecutive month in February. The category’s assets rose 1.41% to close at a record high of Rs 3.46 trillion. The benchmark CNX Nifty Index gained 1.06% in the month on positive cues from announcements in the Union Budget 2015-16, upbeat domestic GDP growth estimate and encouraging international developments.

Balanced funds, which invest a major portion of their AUM in equity, also continued to benefit from the upbeat sentiment in the equity market and attracted net inflows for the ninth consecutive month. The category’s AUM was up by Rs 7.15 bn to Rs 265.07 bn – its record high asset tally.

Hopes of easing interest rates by the Reserve Bank of India (RBI) pushed gilt funds to touch a new peak of Rs 131.80 bn in February, pointed out Crisil Research.

AUM increased 19% or by Rs 21.05 bn primarily due to inflows of Rs 20.58 bn (sixth consecutive rise) in the month. While the RBI did not cut its interest rate in the scheduled policy review meet in the first week of February, it cut the repo rate under the liquidity adjustment facility (LAF) cut by 25 bps to 7.50% on March 4, 2015. This is the second time the central bank has surprised the market in the current year with an in-between policy review cut; it had cut the repo rate by 25 bps in January too.

Liquid/ money market funds reported net inflows of Rs 87.84 bn, giving a boost to the total industry assets. Inflows into the category are a part of the cyclical inflows which occur in the first two months of the quarter (January-February) before being withdrawn for quarter-end requirements (to pay corporate advance tax) in the last month of the quarter (March). The category’s AUM rose 4.04% or by Rs 107.12 bn to Rs 2.76 trillion.

Income funds’ assets rose to a new high of Rs 5.22 trillion, up 0.41% or Rs 21.32 bn, due to mark-to-market (MTM) gains in the underlying assets. Open-ended and interval schemes posted net inflows of Rs 84.86 bn and Rs 1.64 bn, respectively, while closed-ended schemes posted net outflows of Rs 88.02 bn, resulting in net marginal outflows of Rs 1.52 bn for the category.

Gold was the only segment that saw negative sentiment. Gold ETFs’ assets fell 5.53% or by Rs 4.01 bn to Rs 68.44 bn due to persistent redemption pressure and mark-to-market (market value) losses; the latest asset tally is the lowest for the category since July 2011. The gold ETF category registered net outflows (Rs 0.74 bn) for the 21st straight month as subdued performance of the underlying asset discouraged investors. The price of gold (represented by the CRISIL Gold Index) fell 4.26% in February.

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