The mutual fund industry’s month-end assets under management (AUM) rose over 5% month on month or Rs 429 bn to an all-time high of Rs 8.68 trillion in May as per the monthly numbers released by the Association of Mutual Funds in India (AMFI). The previous high of Rs. 8.26 trillion was in January 2013. AUM gains in May were led by inflows into income and liquid funds.
Income funds’ assets rise to 3-year high
Income funds’ (includes long-term debt funds, short-term debt funds, fixed maturity plans and ultra short-term debt funds) assets rose by nearly Rs 250 bn or 6% to a 3-year high of Rs 4.47 trillion, led by inflows of nearly Rs 210 bn plus mark to market gains. Most of the inflows were into short term and ultra short term debt funds as banks and corporates re-invested their funds in these short maturity categories.
Assets of liquid funds climb to 25-month high
Assets of liquid funds too were up by Rs 217 bn to a 25-month high of Rs 2.06 trillion, led by inflows of Rs 207 bn in May plus mark to market gains. Inflows in the category are part of the historical trend, which sees outflows in the quarter-end month and subsequent inflows in the following two months (March saw outflows while April and May have seen inflows). Improved liquidity in the banking system also supported the inflows.
Gilt funds’ witness profit booking
After a sharp rise in AUM of around 14% in April, gilt funds saw profit booking in May. The category saw outflows of nearly Rs 5 bn in May, the highest since Rs 10.61 bn of outflows seen in July 2009. Accordingly, gilt funds’ assets declined by Rs 2.55 bn to Rs 89 bn at the end of May. AUM losses were lower than outflows owing to mark to market gains in the underlying funds. Gilt prices have gained over the year as the Reserve Bank of India cut interest rates four times since April 2012. The current calendar year witnessed three interest rate cuts of 25 basis points (0.25%) each. Interest rates (gilt yields) and prices (fund NAVs) move in opposite directions. Accordingly, as interest rates fall, gilt prices and fund NAVs rise to generate higher returns for these funds. Long term gilt funds that were part of the March 2013 CRISIL Mutual Fund Ranking returned 15.19% gains over the past one year and 6.23% in the past three months until May 31, 2013.
Equity funds report highest outflows in eight months
Equity funds saw outflows of Rs 34 bn in May compared to around Rs 3 bn in April, the highest for the category in eight months. The category has witnessed outflows in 11 months out of the past 12 months as investors continued to book profits. In the latest month, the equity market represented by the CNX Nifty gained around 1% amid mixed domestic and global cues. On year to date basis (five months) too, the index has returned 1.37%. Category assets declined by Rs 32 bn or 1.8% in May to Rs 1.75 trillion.
Table 1 – Month-on-month mutual fund flows and AUM distribution
|Rs bn||Net Inflow/ Outflow||Month-end AUM|
|Liquid / Money Market Funds||206.97||857.45||501.61||2058.63||1841.95||216.68|
|Gold ETF Funds||0.05||-0.36||-0.45||105.80||106.29||-0.49|
|Fund of Funds Investing Overseas||-0.18||-0.23||-1.44||19.58||19.27||0.31|
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