MF AUM post highest percentage growth since Apr 2013: CRISIL

India Infoline News Service | Mumbai |

Liquid funds’ AUM rose by 55% to Rs 1.89 trillion following inflows of Rs 675 bn – the highest inflows for the category in the past six months

The Indian mutual fund industry’s month-end assets under management (AUM) posted its fastest month-on-month percentage growth since April 2013; it was up by nearly 12% (or Rs 880 bn) to Rs 8.34 trillion in October as per the monthly numbers released by the Association of Mutual Funds in India (AMFI). The rise in AUM was primarily due to total net inflows of Rs 663 bn with liquid / money market funds contributing the maximum to the net inflows.

Liquid funds saw highest inflows in the past six months
Liquid funds’ AUM rose by 55% to Rs 1.89 trillion following inflows of Rs 675 bn – the highest inflows for the category in the past six months – due to cyclical inflows and the Reserve Bank of India’s (RBI) liquidity easing measures. Historical trend has shown that quarter-end outflows (September) in the category are reversed in the subsequent month (October) as banks and corporates re-invest the surplus funds they had withdrawn to pay their quarter-end financial and advance tax, respectively.

Meanwhile, the RBI continued to unwind the exceptional liquidity tightening measures which were carried out by it since mid-July. During the month, the central bank cut the marginal standing facility (MSF) rate twice (first by 50 bps and then by 25 bps) as it grew confident of reduction in India’s exchange rate volatility. In addition to MSF cut, the RBI also announced other liquidity easing measures viz., providing additional liquidity through term repos of 7-day and 14-day tenor.

Equity funds’ AUM saw sharp gains despite outflows
Assets of equity funds (including ELSS funds) increased sharply, by nearly 7% or Rs 110 bn, to Rs 1.73 trillion on the back of mark-to-market (MTM) gains in the underlying market. The equity market, represented by the CNX Nifty Index, rose almost 10% in the month (its sharpest gains since January 2012) due to strong buying by foreign institutional investors (FIIs) amid RBI’s latest liquidity easing measures.

Further gains for the category were however capped as investors continued to redeem and exit after the recent gains. The category saw outflows of over Rs 35 bn in October, the highest for equity funds in the past 13 months.

Income and gilt funds’ AUM rise on MTM gains
Assets of debt oriented funds – income and gilts funds – increased following MTM gains (rise in prices and fall in yields) as sentiment for the categories improved after the RBI eased the liquidity squeeze in the banking system. Yield on the 10-year benchmark 7.16% 2023 paper fell to 8.62% on October 31 from 8.77% yield on September 30, 2013 while a 1-year commercial paper (CP) and Certificate of Deposit (CD) closed at 9.78% and 9.02%, respectively, on October 31 compared with 10.50% and 9.58%, respectively, on September 30.

The income funds category, which witnessed outflows for four consecutive months till September, saw inflows of Rs 31 bn in October, in which resulted in 2.2% rise in its AUM. Gilts funds posted 1.5% gain in its assets despite witnessing slight outflows in the month. As of October, income and gilt funds’ AUM stood at Rs 4.34 trillion and Rs 75 bn, respectively. 

Gold ETFs’ assets fell below the Rs 100 bn mark
Recent volatility in gold prices continued to weigh on the gold exchange traded funds as the category saw outflows (Rs 2.9 bn in October) for the fifth month in a row. The category assets declined 5% during the month due to outflows as well as MTM losses to take the total AUM to below the Rs 100 bn mark. The underlying asset prices, represented by the CRISIL Gold Index, fell 2% during the month due to subdued global trend.

FMPs continued to get inflows

The rise in bond yields in the past couple of months continued to attract investors to fixed maturity plans (FMPs). Out of the 52 new fund offers (NFOs) from mutual funds during the month, FMPs accounted for as many as 48 new fund launches but lower than 114 new launches in the previous month. FMPs are closed ended funds which lock-in the yields (currently high) over the time period of the scheme.

Table 1 – Month-on-month mutual fund flows and AUM distribution
 
Mutual fund category Net Inflow/ Outflow (Rs. bn) Month-end AUM (Rs. bn)
Oct-13 Sep-13 2013 Total Oct-13 Sep-13 Difference
Income Funds 31.23 -16.34 392.64 4339.70 4245.96 93.74
Equity Funds* -35.42 -22.31 -119.82 1734.53 1624.50 110.03
Balanced Funds -4.40 -2.89 -8.87 161.41 152.18 9.23
Liquid / Money Market Funds 675.15 -280.19 321.84 1891.49 1221.42 670.07
Gilt Funds -0.44 -15.46 9.94 74.97 73.86 1.11
Gold ETF Funds -2.88 -2.94 -15.28 98.94 104.15 -5.21
Other ETFs -0.26 -0.01 -2.70 14.36 13.92 0.44
Fund of Funds Investing Overseas 0.28 1.04 1.63 24.21 23.70 0.51
Total 663.26 -339.10 579.38 8339.61 7459.69 879.92
* includes ELSS; Source - AMFI


 

Advertisements

  • Save upto Rs.2.67 lakh with Pradhan Mantri Awas Yojana ...Know more
  • Now Save Rs.3150 on your Demat Account ...Click here
  • Now get IIFL Personal Loan in just 8* hours...APPLY NOW!
  • Get the most detailed result analysis on the web - Real Fast!
  • Actionable & Award-Winning Research on 500 Listed Indian Companies.