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The mutual fund industry’s month-end assets under management (AUM) rose by 18% or Rs 1.24 lakh crore to Rs 8.26 lakh crore in April 2013 from Rs 7.01 trillion in March as per the monthly numbers released by the Association of Mutual Funds in India (Amfi). The month-on-month percentage gain in assets was the highest in the past two years and was led by inflows into money market and income funds.
Liquid funds saw inflows worth Rs 85,700 crore in April (the highest in two years), accounting for 80% of the total inflows in the month compared with record high outflows of Rs 1 lakh crore in March. The historical trend shows that quarter-end outflows in the category are reversed in the subsequent month as banks and corporates re-invest their surplus funds that were withdrawn to pay quarter-end financial and advance tax requirements respectively. Led by surge in inflows and mark-to-market gains, the AUM of liquid funds increased 97% or Rs 90,800 crore to Rs 1.84 lakh crore in April from Rs 93,400 crore in March.
Income funds’ (long-term debt funds, short-term debt funds, fixed maturity plans and ultra short-term debt funds) assets rose by Rs 26,300 crore or 7% to a 35-month high of Rs 4.22 lakh crore, led by inflows of around Rs 20,200 crore and mark-to-market gains. Most of the inflows in the category have logged into short term and ultra short term debt funds as banks and corporates re-invested their funds in these short maturity categories. Long-term debt funds too have seen increase in interest led by hopes of interest rate decline in the country.
After falling 2% in March due to outflows of Rs 167 crore, gilt funds’ assets posted a rise of around 14% or Rs 1,100 crore to Rs 9,200 crore in April. The rise in assets was primarily due to inflows of around Rs 1,000 crore in the month amid anticipation of easing of interest rates. Long-term debt and gilt funds benefit in an interest rate declining scenario as long-term 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 long-term debt and gilt fund NAVs (returns). In line with market expectations, the Reserve Bank of India (RBI) cut its key repo rate by 25 basis points in its latest monetary policy review held on May 3. This was the central bank’s third rate cut (each time by 25 bps) in the current calendar year as it pulls up its ante to spur slowing growth in the country.
Despite witnessing outflows of nearly Rs 300 crore, equity funds’ assets rose by 3.6% (highest rise in the past seven months) or Rs 6,100 crore to Rs 1.79 lakh crore in April on the back of market to market gains. The underlying market represented by the Nifty rose over 4% during the month on hopes that the RBI would ease monetary policy to counter slowing domestic economic growth.
Gold exchange-traded funds (ETFs) posted a record fall of around 9% or Rs 1,000 crore in assets to Rs 10,600 crore in the month led by mark-to-market losses as well as outflows from the category. Gold price represented by the Crisil Gold Index fell 8% in the latest month led by weak global trend. The category also reported outflows of Rs 36 crore in April, the third consecutive month of outflows after Rs 87 crore and Rs 8 crore of outflows in March and February, respectively, due to a fall in demand for the commodity.
| Rs (in billion) | Net inflow/ outflow | Month-end AUM | ||||
| Apr 2013 | Mar 2013 |
2013 Total | Apr 2013 | Mar 2013 | Difference | |
| Income Funds | 201.59 | 11.65 | 332.88 | 4,223.00 | 3,959.85 | 263.15 |
| Equity Funds | -2.70 | 7.68 | -23.55 | 1,786.53 | 1,725.08 | 61.45 |
| Balanced funds | -0.04 | 1.07 | 3.31 | 171.26 | 163.07 | 8.19 |
| Liquid / Money Market Funds | 857.45 | -1,097.89 | 294.64 | 1,841.95 | 933.92 | 908.03 |
| Gilt Funds | 9.86 | -1.67 | 24.10 | 91.81 | 80.74 | 11.07 |
| Gold ETF Funds | -0.36 | -0.87 | -0.50 | 106.29 | 116.48 | -10.19 |
| Other ETFs | 0.17 | -0.19 | -1.18 | 15.41 | 14.76 | 0.65 |
| Fund of Funds Investing Overseas | -0.23 | -0.24 | -1.26 | 19.27 | 20.53 | -1.26 |
| Total | 1,065.74 | -1,008.46 | 628.44 | 8,255.52 | 7,014.43 | 1,241.09 |
| Source: Amfi | ||||||
