MF AUMs cross the Rs 9 lakh cr mark

Assets under management (AUM) of the Indian mutual fund industry increased 9.4 per ecnt, or by Rs 77,400 crore, in January to a record high of Rs 9.03 lakh crore, according to monthly numbers released by the Association of Mutual Funds in India, cited in a report by Crisil Research on Monday. 

The rise in AUM was primarily due to inflows of Rs 83,500 crore, the highest since April 2013. Bulk of the inflows during the month was into money market/ liquid funds.

Equity funds (including ELSS funds) recorded inflows for the third consecutive month in January at Rs 427 crore, albeit less than Rs 699 crore and Rs 857 crore seen in November and December, respectively. The category assets, however, declined 4 per cent, or by Rs 7,200 crore, to Rs 1.75 lakh crore during the month, dragged lower by weakness in the underlying market. Domestic equities represented by the benchmark index CNX Nifty declined 3.40 per cent over the month on weak domestic and global cues.

Gold ETFs post outflows for the eighth consecutive month in January, with investors continuing to exit gold exchange traded funds (ETFs) amid weak sentiment for the underlying asset class. The latest month saw outflows of Rs 165 crore compared with Rs 157 crore the previous month. The category’s assets managed to end the month positive for the first time since August 2013, up 2.4 per cent, or Rs 2.1 crore, near the Rs 9,000 crore mark, helped by a rise in precious metals prices. The asset class, as represented by the CRISIL Gold Index, gained 4.36 per cent in January following rise in international prices.

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.

Money market/liquid funds reported their highest inflows in nine months. These funds saw net inflows worth Rs 77,500 crore, the highest in nine months, leading to a 43 per cent 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 reinvest the surplus funds they withdraw to pay their quarter-end advance tax requirements, according to Crisil. 

Some improvement in the liquidity situation due to lending by 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 (long-term, short-term and ultra short-term debt funds) and fixed maturity plans (FMPs) reported net inflows of Rs 5,900 crore after two consecutive months of outflows in November and December (totalling Rs 12,300 crore). 

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