Mutual funds average assets post a record rise in June quarter

The June quarters average assets under management or AUM posted a record rise of 9.05%, or by Rs 819.57 bn, to Rs 9.87 trillion, according to the Association of Mutual Funds in India

July 04, 2014 10:46 IST | India Infoline News Service

The uptrend in the Indian mutual fund industry continues. The June quarters average assets under management or AUM (excluding fund of funds) posted a record rise of 9.05%, or by Rs 819.57 bn, to Rs 9.87 trillion, according to the Association of Mutual Funds in India (AMFI). Growth was driven by rise in assets of equity funds, short-duration debt funds and fixed maturity plans (FMPs).

Equity funds witness record rise in AUM led by improved sentiment

Equity mutual funds saw record absolute rise in average AUM up by Rs 330.07 bn or 16% to Rs 2.36 trillion led by mark to market gains and inflows. The equity funds contribution to the gains in the industry assets was the highest among all categories. The latest gain was also the third consecutive gain for the category, and was primarily led by improvement in sentiment for the underlying asset class on hopes of strong economic reforms by a stable majority government at the centre. The domestic equity market (represented by CNX Nifty index) surged 13.53% in the latest quarter.

FMPs assets also see record high

Assets of FMPs continued to ride to record high levels with a rise of 12%, or by Rs 186.43 bn, to Rs 1.74 trillion. Penchant for FMPs can be contributed to the prevailing high interest rate in the economy as it helps investors to lock their investments at higher yields in closed-ended funds. Yields on the one-year commercial paper (CP) and certificate of deposit (CD) traded at 9.26% and 8.91%, respectively, at the end of June 2014, up significantly from 8.76% and 8.15% a year ago.

Shorter duration (maturity) funds report gain

Shorter duration funds - which include money market funds, ultra-short term and short-term debt funds - reported a rise in assets (consolidated) for the third consecutive quarter as investors preferred investing in these categories since they are less sensitive to interest rate uncertainty vis--vis longer duration funds. Prevailing high interest rates also aid sentiments for the short maturity debt fund categories. Consolidated assets of the category rose almost 11.87%, or by Rs 469.03 bn, to Rs 4.42 trillion. Individually, assets of ultra-short term funds rose by Rs 136.69 bn (highest since September 2012) to Rs 974.31 bn, liquid / money market funds by Rs 286.89 bn to Rs 2.69 trillion and short term debt funds by Rs 45.46 bn (largest gain in the last four quarters) to Rs 751.15 bn.

Infrastructure Debt Funds assets rise

Infrastructure debt funds (IDFs), which have recently commenced business, have started declaring their average asset numbers that stood at Rs 10.23 bn in June, up compared with Rs 5.83 bn at the end of March.

Longer maturity debt funds see record fall in average AUM

Longer maturity funds - long term debt and gilt funds - posted the worst decline in average AUM since the September 2010 quarter (when AMFI started declaring average AUM) in the latest quarter as investors avoided the category due to uncertainty of interest rate. Long term debt and gilt funds average AUM fell by a record Rs 161.68 bn and Rs 9.54 bn to end the quarter at Rs 785.22 bn and Rs 59.13 bn respectively.

Gold ETFs lose sheen

Average AUM of gold exchange traded funds (ETFs) fell for the third consecutive quarter, down by Rs 8.53 bn or 9.37% to Rs 82.47 bn, due to outflows led by subdued performance by the underlying asset. The category witnessed monthly outflows from June 2013 to May 2014.

Share of direct plans increases to 34%

The share of direct plans increased to 34% of the industrys AUM (excluding fund of funds) in the reported quarter vis--vis 33% in the previous quarter. In terms of growth, the average AUM of direct plans rose around 15% (Rs 440.83 bn) to Rs 3.39 trillion from Rs 2.95 trillion in the March quarter. Direct plans came into existence on January 1, 2013 after the Securities and Exchange Board of India (SEBI) asked fund houses to provide informed investors direct access to mutual fund schemes sans any distributor cost.

Top mutual funds by average AUM log highest gains

Top mutual funds in terms of average AUM posted highest absolute gains in the June quarter. HDFC Mutual Funds average AUM retained its top position across fund houses and was the best performer in the June quarter. The fund registered highest absolute rise of Rs 170.73 bn (or 15.11%) to Rs 1.30 trillion. Increase in the fund houses assets was also boosted by acquisition of Morgan Stanley Mutual Fund, which held Rs 25.72 bn of average AUM as of March 2014. ICICI Prudential Mutual Fund maintained the second position at Rs 1.18 trillion; it saw the second highest absolute gain - up Rs 112.34 bn or 10.52%. Reliance Mutual Fund maintained third rank with the asset tally at Rs 1.13 trillion; its average assets moved up 9.05% or by Rs 93.73 bn. In percentage terms, Goldman Sachs Mutual Fund saw the highest rise of 64% to Rs 61.79 bn. AMCs, which witnessed a major fall in AUM, included JPMorgan Mutual Fund whose average AUM fell by Rs 17.04 bn to Rs 145.44 bn, and LIC NOMURA Mutual Fund whose average AUM fell by Rs 10.95 bn to Rs 94.89 bn.

Out of the 45 fund houses (including IDFs) that have declared their average AUM, 35 posted a rise in AUM. The share of the top five mutual funds assets rose to 55% in the June quarter from 54% in the previous quarter while the share of top 10 funds assets was 78% (same as the previous quarter). The bottom 10 fund houses continued to occupy less than 1% of the average AUM.


Chart 1 Mutual fund quarterly average AUM trend

Note: Direct plans AUM is a part of total AUM

Table 1 Category-wise average AUM (Rs bn)

Mutual fund categoryApr-Jun 2014Jan-Mar 2014Absolute Change (bn)% Change
Liquid/money market2693.722406.84286.8911.92
Ultra short term974.31837.63136.6916.32
Short term debt751.15705.6945.466.44
Long term debt785.22946.90-161.68-17.07
Fixed maturity plans (FMPs)1736.821550.39186.4312.02
Infrastructure debt fund10.235.834.4175.63
Other debt-oriented funds372.96367.105.871.60
Gold ETFs82.4791.00-8.53-9.37
Source: CRISIL Mutual Fund Database

Table 2 Category-wise average AUM of direct plans (Rs bn)
Mutual fund categoryApr-Jun 2014Jan-Mar 2014Absolute Change (bn)% Change
Liquid/money market1585.321370.21215.1115.70
Ultra short term384.96308.4576.5124.81
Short term debt176.83164.7312.107.34
Long term debt132.35154.17-21.83-14.16
Fixed maturity plans (FMPs)929.60799.14130.4616.33
Other debt-oriented funds62.7355.866.8812.31
Source: CRISIL Mutual Fund Database

Table 3 Top 10 AMCs by average AUM (Rs bn)

Mutual fund categoryApr-Jun 2014Jan-Mar 2014Absolute Change (bn)% Change
HDFC Mutual Fund1300.361129.63170.7315.11
ICICI Prudential Mutual Fund1180.561068.22112.3410.52
Reliance Mutual Fund1129.141035.4293.739.05
Birla Sun Life Mutual Fund985.56890.5195.0510.67
UTI Mutual Fund794.41742.3352.087.02
SBI Mutual Fund692.13654.9937.135.67
Franklin Templeton Mutual Fund509.87454.0455.8212.29
IDFC Mutual Fund436.94413.4923.455.67
Kotak Mahindra Mutual Fund355.21330.7924.417.38
DSP BlackRock Mutual Fund331.13316.3114.814.68
Source: AMFI

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