Significant inflows into income plans and liquid funds boosted net assets of domestic mutual funds in July, according to data posted by Securities and Exchange Board of India (Sebi) on its website.
Inflows into equity schemes and equity-linked savings schemes due to the surge in share indices also contributed to asset growth.
However, fund houses had to again rely on income plans and liquid funds, a short-term money market tool, to push up the asset base.
| GROWTH BOOSTER Category-wise change in AUM, in Rs crore | |||
| Category | June | July | % chng |
| Income | 2,84,929 | 3,80,786 | 33.64 |
| Liquid | 1,11,215 | 1,39,156 | 25.12 |
| Equity | 1,42,814 | 1,56,793 | 9.79 |
| ELSS | 18,229 | 19,800 | 8.62 |
| Balanced schemes | 15,660 | 16,598 | 5.99 |
| Gold ETFs | 843 | 865 | 2.61 |
| Fund of funds overseas | 2,609 | 2,563 | -1.70 |
| Other ETFs | 898 | 878 | -2.23 |
| Gilt | 5,479 | 4,447 | -18.84 |
| Total | 5,82,676 | 7,21,886 | 23.89 |
| Source: Sebi | |||
While cash plans and income funds registered inflows, gilt schemes witnessed outflows as investors booked profits.
As of July-end, the mutual fund industry, comprising 36 registered fund houses, managed assets worth Rs 7.218 lakh crore, up 24 per cent from June.
Average assets under management (AUM) of the mutual fund industry in July was Rs 6.899 lakh crore, up 2.83 per cent from June.
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Income funds managed to attract inflows on the back of ample liquidity within the system. Income fund category — comprising erstwhile liquid plus funds and medium-term bond funds — registered 33.64 per cent growth in assets, led by about Rs 3.8 lakh crore of net inflow.
Liquid funds, which are used by companies for short-term cash management, also registered inflows, with assets rising 25.12 per cent in July.
The major contributors to liquid funds have been banks, which seem to have found a short-term avenue for parking their excess liquidity, said mutual fund distributors.
Liquid funds and income funds had witnessed asset erosion in June due to quarterly advance payment. Companies redeem their investments in mutual funds to pay advance tax.
“The redeemed money comes back in first or second week of July,” said a fund manager at a private fund house. Assets of gilt funds fell nearly 19 per cent as investors booked profits after gilt prices rallied last month ahead of the Reserve Bank of India’s monetary policy.
Equity funds
Diversified equity and equity-linked savings schemes reported almost 10 per cent and 9 per cent rise in AUM, respectively, due to the firm trend in the share market.
Investments in ELSS enjoy tax breaks as per Section 80C of the Income Tax Act, 1961.
Hopes of economic recovery led Bombay Stock Exchange’s Sensex and National Stock Exchange’s Nifty up 8.11 per cent and 8.04 per cent, respectively, in July.
However, assets of most equity schemes in the industry grew more or less in line with the rise in key share indices.
The volatile and uncertain phase in Indian markets has led to subdued interest in almost all new equity fund offers. Among equity funds, diversified equity schemes attracted the maximum inflows in July.
Exchange traded funds
Exchange-traded funds (ETFs) witnessed some profit booking last month. In June, equity exchange traded funds had registered the highest asset growth across all categories. However, in July, the category saw assets eroding by 2.23 per cent.
The pioneer of ETFs in India, Benchmark Mutual Fund, which offers gold, equity and debt ETFs, managed average assets worth Rs 1,220 crore in July, up 9 per cent from the previous month.
The rise in assets of Benchmark Mutual Fund was led by inflow in PSU Bank BeES.
In July, the highest asset rise was posted by PSU Bank BeES, whose average assets rose 55 per cent to Rs 2,120 lakh as shares of state-owned banks rose ahead of the Union Budget on hopes of sops for the sector.
PSU bank shares also rose on expectations of a hike in exemption limit on housing loan interest to Rs 2 lakh- from Rs 1.5 lakh.