 "MF AUM decline 1.50% from January: Crisil")
The fall in AUM was attributed to the mark-to-market fall in assets of equity oriented mutual funds following a 6% decline in the CNX Nifty during the month.
AUM of income funds (mainly short maturity funds) declined owing to tight liquidity conditions prevailing towards the financial year end. The industry saw sharply lower net inflows of Rs 3600 crore in February as against Rs 60,700 crore in the previous month.
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Equity funds witness largest decline in AUM in 15 months
Month-end AUM of equity funds declined to Rs 1.76 lakh crore (down over 7% or Rs 13,800 crore)—the largest decline in past 15 months—led by mark-to-market losses in the underlying assets and marginal outflows. Net outflows from the category slowed to Rs 160 crore in February, the lowest in the past nine months. The domestic equity market represented by the CNX Nifty plunged nearly 6% in February due to weak domestic and global cues.
On the domestic front, markets were affected by weak domestic economic indicators, downbeat earnings reported by some index majors, freight hike in the railway budget and the Union Budget falling short of expectations. Among global factors, fear that the US central bank may slow or stop its bond buying program, concerns about political gridlock in Italy and discouraging Chinese manufacturing data led to the decline.
Short Maturity funds see outflows as financial year-end nears
Income funds’ (includes long term and short term debt funds besides FMPs and ultra short term debt funds) AUM fell by 1.4% to Rs 3.93 lakh crore in the month primarily due to outflows of Rs 5300 crore from the category. Tight liquidity conditions towards the financial year end saw redemptions from short maturity debt funds. While FMPs have seen redemptions of Rs 1600 crore, these have been balanced by inflows of Rs 2100 crore into interval funds.
Liquid funds garner major share of inflows
Liquid/ money market funds saw inflow of Rs 8,600 crore in February, the only category to draw sizeable inflows for the month. Inflows in the category are part of the cyclical inflow that occur in the first two months of the quarter (January-February) before being withdrawn for quarter end requirements (to pay corporate advance tax) in the last month of the quarter (March).
Gilt funds continue to witness inflows
Gilt funds continued to see inflows (though lower) for the sixth consecutive month in February. Inflows were lower at over Rs 400 crore in February compared with Rs 1,100 crore inflow in January. The category has become attractive in the recent months on anticipation of easing of interest rates. Bond prices (net asset values or NAVs) and interest rates (yields) move in opposite directions. A fall in interest rates will result in a rise in bond prices and positively impact gilt fund NAVs (returns).
Outflows in Gold ETF for first time since June 2012
AUM of Gold ETFs fell by 4% to Rs 11600 crore in the month following mark to market losses and outflows. The category saw outflow of Rs 8 crore in February, the first month of outflow since June 2012. The mark-to-market losses (as represented by the Crisil Gold Index) were around 4% amid a weak global trend for gold following increase in risk appetite.
Month-on-month mutual fund flows and AUM distribution
| Rupees Billion | Net Inflow / Outflow | Month-end AUM | ||||
| Feb 13 | Jan 13 | 2013 Total | Feb 13 | Jan 13 | Difference | |
| Income Funds | -53.17 | 172.81 | 119.64 | 3,929.07 | 3,985.42 | -56.35 |
| Equity Funds | -1.63 | -26.90 | -28.53 | 1,762.63 | 1,900.91 | -138.28 |
| Balanced Funds | 1.35 | 0.93 | 2.28 | 166.78 | 180.04 | -13.26 |
| Liquid / Money Market Funds | 86.43 | 448.65 | 535.08 | 2,043.08 | 1,958.80 | 84.28 |
| Gilt Funds | 4.46 | 11.45 | 15.91 | 82.38 | 77.38 | 5.00 |
| Gold ETF Funds | -0.08 | 0.81 | 0.73 | 115.59 | 120.57 | -4.98 |
| Other ETFs | -1.19 | 0.03 | -1.16 | 15.06 | 16.92 | -1.86 |
| Fund of Funds | ||||||
Source: AMFI