The mutual fund industry's assets increased to Rs 6.75 lakh crore by the end of February, registering an increase of Rs 16,100 crore over Rs 6.59 lakh crore in January.
According to Crisil Research, the 2% month-on-month rise in mutual fund assets in February 2012 was largely due to mark-to-market gains notched by equity funds and inflows witnessed in money market funds.
Owing to the uptick in the equity market, assets of equity funds rose by Rs 6,100 crore to Rs 1.86 lakh crore.
The benchmark S&P CNX Nifty rose around 4% in February on the back of persistent foreign institutional investor (FII) inflows and firm global cues.
FIIs bought equities worth Rs 25,200 crore in February, the highest monthly net buying since records are available and compared to Rs 11,100 crore in January, Crisil Research said.
The equity funds category, however, saw outflows of Rs 2,800 crore in the month, possibly due to redemptions by investors aiming to lock gains.
"This was the second consecutive month of outflows in the category as investors booked profits on recent gains in the market," the report said.
Inflows into liquid funds was another positive factor for mutual funds assets. The category saw net inflows of Rs 6,900 crore in February 2012, taking the total asset tally for the category to Rs 1.57 lakh crore (up 6.5%) by February end.
Income funds, another type of debt-focussed mutual funds, witnessed outflows for the fourth consecutive month. These outflows were the second biggest drag on overall mutual fund industry assets in February.
In February the segment witnessed an outflow of Rs 2,500 crore taking the total net outflows in the past four months in the category to Rs 22,600 crore.
"Redemptions from the ultra short-term debt and short-term funds in this category could be a reason for the outflows as investors shift their preferences to long-term debt funds due to peaking of interest rates," the report said.
Fixed maturity plans (FMPs) continued to garner majority of the new fund offers (NFOs) in the month. As many as 64 FMPs were launched in the month, garnering Rs 11,300 crore.
An analysis of month-on-month mutual fund flows and AUM distribution, shows that so far this year money market funds, gilt funds and gold ETF funds witnessed net inflows of Rs 33,289 crore, Rs 433 crore and Rs 167 crore, respectively.
