MF AUM make history, cross the Rs 9 trillion mark

Money market/ liquid funds saw net inflows worth Rs 775 bn, leading to a 43% rise in AUM

February 10, 2014 5:32 IST | India Infoline News Service
January to a record high of Rs 9.03 trillion, according to the monthly numbers released by the Association of Mutual Funds in India. The rise in AUM was primarily due to inflows of Rs 835 bn, the highest since April 2013. Bulk of the inflows during the month was into money market/ liquid funds.
Liquid funds report highest inflows in nine months
Money market/ liquid funds saw net inflows worth Rs 775 bn  (the highest in nine months), leading to a 43% rise in AUM. This was chiefly due to periodical inflows in the banking system – quarter-end outflows (December) in the category are typically reversed in the subsequent month (January) as banks and corporates re-invest the surplus funds they withdraw to pay their quarter-end advance tax requirements. Some improvement in the liquidity due to lending by the Reserve Bank of India (RBI) through its term repo window, purchases of gilts via open market operations by the central bank and capital infusion into state-owned banks by the government also contributed to inflows in the category.
Income funds log inflows after two months of outflows
Income funds (long-term, short-term and ultra short-term debt funds; and fixed maturity plans, or FMPs) reported net inflows of Rs 59 bn after two consecutive months of outflows in November and December (totalling Rs 123 bn). Inflows were primarily into short-term maturity debt funds and FMPs due to the attractive short-term rates caused by the RBI’s monetary tightening measures. The central bank hiked its key interest rate – the repo rate – by 25 bps to 8% in January. This is the third hike by the RBI – a total hike of 75 bps since September 2013 – in keeping with its measures to curb resurgent inflation in the country. One-year commercial papers and certificates of deposit traded at 10% and 9.64%, respectively, on January 31, 2014, compared with 9.92% and 9.28% on December 31, 2013. Out of the 82 new fund offers from mutual funds during the month, FMPs accounted for 75 new fund launches (similar to December).
Equity funds register inflows for the third consecutive month
Equity funds (including ELSS funds) recorded inflows for the third consecutive month in January at Rs 4.27 bn, albeit less than Rs 6.99 bn and Rs 8.57 bn seen in November and December, respectively. The category assets, however, declined 4%, or by Rs 72 bn, to Rs 1.75 trillion during the month, dragged lower by weakness in the underlying market. Domestic equities represented by the benchmark index CNX Nifty declined 3.40% over the month on weak domestic and global cues.
Gold ETFs post outflows for the eighth consecutive month
Investors continued to exit gold exchange traded funds (ETFs) for the eighth consecutive month in January amid weak sentiment for the underlying asset class. The latest month saw outflows of Rs 1.65 bn compared with Rs 1.57 bn in the previous month. The category’s assets managed to end the month positive for the first time since August 2013, up 2.4%, or Rs 2.1 bn, near the Rs 90 bn mark, helped by a rise in precious metals prices. The asset class, as represented by the CRISIL Gold Index, gained 4.36% in January following a rise in international prices.
Gilt funds see outflows for second consecutive month
Gilt funds saw outflows for the second consecutive month in January amidst weak sentiment for gilts due to persistent worries over monetary tightening by the RBI. The latest month saw outflows of Rs 1.35 bn vs outflows of Rs 5.19 bn in December. The category assets ended the month Rs 1.02 bn lower at Rs 73.93 bn.
Table 1 – Month-on-month mutual fund flows and AUM distribution
Mutual fund category Net Inflow/ Outflow (Rs bn) Month-end AUM (Rs bn)
Jan-14 Dec-13 2014 Total Jan-14 Dec-13 Difference
Income Funds 59.05 -89.54 59.05 4319.44 4244.45 74.99
Infrastructure Debt Funds - 3.75 - 3.75 3.75 0.00
Equity Funds* 4.27 8.57 4.27 1754.21 1826.62 -72.41
Balanced Funds -1.16 0.25 -1.16 160.47 168.13 -7.66
Liquid / Money Market Funds 774.94 -663.13 774.94 2589.80 1812.38 777.42
Gilt Funds -1.35 -5.19 -1.35 73.93 74.95 -1.02
Gold ETF Funds -1.65 -1.57 -1.65 89.96 87.84 2.12
Other ETFs -0.80 0.31 -0.80 13.71 14.89 -1.18
Fund of Funds Investing Overseas 2.04 0.77 2.04 27.28 25.39 1.89
Total 835.34 -745.78 835.34 9032.55 8258.40 774.15
* Includes ELSS
Source - AMFI

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