Mutual Funds: AUM's in November highest since April 2010

The mutual fund Industry saw its Assets under Management (AUM) grow 3.25 per cent to Rs 7,93,152 crore (Rs 7.93-lakh crore) in November 2012, higher by Rs 25,000 crore over October 2012, as per the data released by the Association of Mutual Funds in India (AMFI). These are the highest month-end AUM’s since April 2010. The AUMs in the month of October, too, had seen a seven per cent growth.

The traction was provided by money market / liquid funds that saw net inflows worth Rs 11,400 crore though lower compared to Rs 18200 crore in the previous month. According to a report by Crisil, the inflows in the category are part of the cyclical money flow in the category as corporate invest their short-term investments in this category during the quarter before withdrawing a major chunk at the end of the quarter to meet their advance tax requirements.

Debt funds

With no change in the interest rates, investors continued to prefer dynamic bond funds, short-term and ultra short–term debt funds within the category. The interest rate uncertainty accrues benefits to these funds. Income funds thus grew by Rs 4,010 crore. The income funds had boosted the AUM’s in October, too.

Gilt funds saw inflows of Rs 1,006 crore in November, the third consecutive month of net inflows in the category. The Crisil report observes that investor interest in this category has risen in recent months as the schemes / funds in this segment are expected to benefit when the Reserve Bank of India (RBI) reverses its stance on interest rates. A fall in interest rates would result in a rise in bond prices and positively impact gilt fund NAVs.

Gold ETFs

Interestingly, the month-end assets of gold exchange traded funds (ETFs) rose to a record new high with AUM up nearly 3.9 per cent (Rs 44,000 crore) to Rs 11,918 crore. The rise in assets was due to inflows as well as mark to market gains in the underlying commodity.

The category logged inflows of Rs 270 crore in November versus Rs 387 crore in October. Except for two months, gold ETFs have witnessed net inflows in every month of the current calendar year. Gold prices (represented by the CRISIL Gold Index) rose 1.3 per cent in November due to rise in demand for gold in the festival season.

It was heartening to see Equity funds’ AUM rise by 3.5 per cent (Rs 6500 crore) to Rs 190113 crore despite witnessing outflows for the sixth consecutive month. The rise in the assets for the category was due to mark to market gains from the underlying markets.