February proved to be a good month for the mutual fund industry. After four months, the industry crossed the Rs 5-lakh crore mark in their average assets under management (AAUM) last month, with income and liquid funds leading in inflows.
According to data compiled by the Association of Mutual Funds in India (Amfi), income funds saw an increase of 8.6 per cent in their assets in February, when compared with the previous month.
However, the assets of gilt funds fell by 8.8 per cent. This is because many investors opted for profit-booking on back of a rise in yields by almost 5 per cent due to rising government borrowing, thereby making it unattractive for investors. But yields in corporate debt papers didn’t go up so much. This helped income funds to remain attractive. Income funds invest in a mix of corporate and gilt papers. The assets of liquid funds also rose by 12 per cent.
However, mirroring the fall in the stock markets, the assets of equity funds slipped by another 4.2 per cent. Even equity-linked savings schemes saw a 2 per cent fall in their assets. But the biggest fall was observed in exchange traded funds (ETFs), other than gold. These funds, including ETFs of various indices, fell a good 45 per cent from Rs 1,461 crore to Rs 808 crore.
Market experts attributed this fall to the dismal stock market performance. Also, many investors moved out of ETFs due to fears of a further fall. Gold ETFs, despite continuing their good performance, saw only a marginal rise of 1.8 per cent in assets. This was because of some redemptions. The net outflow was Rs 25 crore, mainly on account of profit-booking.