MF AUM post subdued growth in August 2013

Gold ETFs’ AUM increased 11% to Rs 118 bn in August, led by MTM gain as the underlying asset prices

September 11, 2013 9:11 IST | India Infoline News Service
The Indian mutual fund industry’s month-end assets under management (AUM) posted subdued month-on-month growth of 0.7% or Rs 53 bn to Rs 7.66 trillion in August as per the monthly numbers released by the Association of Mutual Funds in India (AMFI). The rise in AUM was due to net inflows of Rs 237 bn with liquid / money market funds garnering the largest share of inflows.

Liquid funds reverse outflows from previous month

Liquid funds’ AUM rose by 16% to Rs 1.50 trillion primarily due to inflows of Rs 321 bn. The category reversed its outflows seen in the previous month as market participants got acclimatized to the tight liquidity conditions in the banking system.

The Reserve Bank of India (RBI) also came out with measures later in the month to reduce the liquidity pressure in the banking system.

Income funds saw largest outflows since December 2012

Income funds’ AUM fell by 2.66% or Rs 115 bn to Rs 4.20 trillion led by outflows of Rs 93 bn during the month. This was the third consecutive month of outflows from the category and was the largest monthly outflow since December 2012. The outflow was due to the recent volatility in the debt market following de facto monetary-tightening measures by the central bank coupled with negative returns from the category. The category represented by the CRISIL-AMFI Income Fund Performance Index gave negative annualised returns of 30.1% in the one month ended August 30.

Gilts funds’ AUM rose after three consecutive falls

Gilt funds, which reported a fall in its assets in the previous three months, posted 8.4% rise in its AUM to Rs 89 bn in August. The category’s assets gained despite posting mark-to-market (MTM) losses due to inflows of Rs 9 bn as market participants renewed interest in government bonds after the RBI announced steps to ease long-end bond yields on August 20. Yield on the 10-year benchmark 7.16% 2023 paper closed down at 8.60% on August 30 compared with 9.23% on August 19 but higher compared with 8.17% on July 31.

FMPs get significant inflows

The recent rise in bond yields due to the liquidity-tightening measures by the RBI attracted a lot of buying interest in fixed maturity plans (FMPs). As per polled and traded data compiled by CRISIL Research, one-year commercial paper (CP) and a one-year certificate of deposit (CD) were trading at 12.0% and 10.8% at the end of August compared with 11.0% and 9.9% at the end of July respectively. FMPs accounted for as many as 122 new fund launches out of 127 new fund offers (NFOs) by mutual funds in the month as compared with 37 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.

Equity funds see inflows on buying interest

Equity mutual funds too saw inflows in the month with the category reporting inflows of Rs 4.6 bn in the month compared with outflows of Rs 18 bn in the previous month. The category was also a net buyer in the equity market in August and bought worth Rs 16 bn; this is the first month of positive net buying by mutual funds since June 2012 (when they had net purchased Rs 5 bn of equities). The category as well as the market witnessed interest on value buying after recent sharp downfalls by the equity market.  However, the category’s assets continued to fall with latest month posting fall of 3.5% or Rs 57 bn due to MTM losses. The equity market, represented by the CNX Nifty Index, was down by 4.7% in the month.

Gold ETFs’ assets rose despite record outflows

Gold ETFs’ AUM increased 11% (a similar percentage gain as last month) to Rs 118 bn in August, led by MTM gain as the underlying asset prices, represented by the CRISIL Gold Index, rose 17% in the month tracking positive global trend and fall in the rupee. The category, however, saw record outflows of Rs 5.9 bn in the month as investors withdrew from the category amid heavy volatility in the underlying metal prices.

Fund of funds investing overseas continue to attract inflows

Fund of funds investing overseas saw inflows of Rs 1.1 bn in August as compared with inflows of Rs 0.29 bn in the previous month, the third month of inflows prior to which the category had seen outflows for 12 consecutive months. The category also witnessed MTM gains due to a sharp depreciation of the Indian rupee in recent months. The category’s AUM rose by 14.6% to Rs 23.7 bn in the month.

Month-on-month mutual fund flows and AUM distribution
Rs bn Net Inflow/ Outflow Month-end AUM
Aug-13 Jul-13 2013 Total Aug-13 Jul-13 Difference
Income Funds -92.74 -26.57 377.75 4202.66 4317.33 -114.67
Equity Funds 4.58 -18.27 -62.09 1569.04 1626.09 -57.05
Balanced Funds -0.17 -1.63 -1.58 146.07 151.57 -5.50
Liquid / Money Market Funds 321.23 -452.96 -73.12 1498.80 1290.00 208.80
Gilt Funds 9.08 0.96 25.84 88.90 82.03 6.87
Gold ETF Funds -5.88 -1.07 -9.46 118.28 106.69 11.59
Other ETFs -0.07 -1.42 -2.43 13.59 13.94 -0.35
Fund of Funds Investing Overseas 1.10 0.29 0.31 23.69 20.68 3.01
Total 237.13 -500.67 255.22 7661.03 7608.33 52.70
Source - AMFI

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