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Assets under management (AUM) of the mutual fund industry fell 1.5% to Rs 8.14 lakh crore in February from the record high in January due to mark-to- market fall in equity oriented mutual funds, a report by Crisil Research said.
"The fall in AUM was attributed to the mark to market fall in assets of equity oriented mutual funds following the 6% decline in the CNX Nifty during the month," the report said.
Assets under the income funds also declined due to tight liquidity conditions prevailing towards the end of this financial year, it added.
Also, the inflows saw sharp drop in net inflows of Rs 3,600 crore in February as compared to Rs 60,700 crore in the previous month.
Meanwhile, the AUM of equity funds declined to Rs 1.76 lakh crore, which was down over 7% or Rs 13,800 crore, marking the largest decline in the past 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," the report said.
However, net outflows from the category slowed to Rs 160 crore in February, which was the lowest in the past nine months.
On income funds front, the AUM in this category fell by 1.4% to Rs 3.93 lakh crore in February, primarily due to outflows of Rs 5,300 crore from the category.
"Tight liquidity conditions towards the financial year end saw redemptions from short maturity debt funds. While FMPs (fixed maturity plans) have seen redemptions of Rs 1,600 crore, these have been balanced by inflows of Rs 2,100 crore into interval funds," the report said.
The rating agency also pointed out that major share of inflows of Rs 8,600 crore came into the liquid or money market funds.
"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are part of the cyclical inflow that occur in the first two months of the quarter (January-February) before being withdrawn for quarter end requirements (to pay corporate advance tax) in the last month of the quarter (March)," it said.
Referring to gilt funds, the report said that these funds continued to see inflows for the sixth consecutive month in February despite being lower than the previous month.
"Inflows were lower at over Rs 400 crore in February compared with Rs 1,100 crore inflow in January," it said adding that the category has become attractive in the recent months on expectation of easing interest rates.
Interestingly, gold ETFs saw outflows for the first time since June 2012 with the AUM falling by 4% to Rs 11,600 crore in February due to mark to market losses and outflows.
