MF asset base slips 2% in Dec on sell-off from debt schemes, liquid funds

The mutual fund industry saw its asset base slip by 2 per cent to Rs 26.54 trillion at December-end, primarily on account of outflow from debt-oriented schemes, including liquid funds.

The 44-player industry logged an all-time high assets under management (AUM) of Rs 27.04 trillion at November-

end, as compared to Rs 26.54 trillion by the end of last month, representing a decline of 2 per cent, according to data from the Association of Mutual Funds in India (Amfi).

Mutual fund houses witnessed an overall outflow of Rs 61,810 crore last month as compared to an inflow of Rs 54,419 crore in November. Fund managers attributed the drop in the asset base to outflow of Rs 78,940 crore from debt-oriented schemes.

 

Among debt-oriented schemes, liquid funds, with investments in cash assets such as treasury bills, certificates of deposit and commercial paper for shorter horizon, witnessed a pull out of over Rs 71,000 crore, the highest among the fixed-income segment last month.

Besides, overnight funds, which invest in securities with a maturity of one day, saw outflows of over Rs 8,800 crore. However, banking & PSU funds, which have a high allocation to highest rated bonds, received funds to the tune of Rs 4,770 crore.

"Fixed income categories, especially those having modified duration or average maturity less than a year witnessed net outflows during the month. However, this is on expected lines as these categories typically witness net outflows during the quarter end months on account of advance tax payment obligation," said Himanshu Srivastava, Senior Analyst Manager Research at Morningstar Investment Adviser India.

Naveen Kukreja, CEO at Paisabazaar.com attributed the decline in monthly asset base to sell-off in debt schemes.

Equity-oriented funds continued to attract investments tracking the surge in domestic markets in December. Such funds saw a net infusion of Rs 4,432 crore last month. In comparison, net flow of Rs 933 crore was seen in November and Rs 6,015 crore in October.

"The small cap and mid cap indices are underperforming currently. The industry has seen inflows in the large cap funds and it will continue to be the biggest attraction among equity funds," Kukreja added.

Further, collection through systematic investment plan (SIP) has surged to over Rs 8,518 crore in December from Rs 8,273 crore in the preceding month. The asset base of SIP rose to an all-time high of Rs 3.17 trillion from Rs 3.12 trillion reflecting positive sentiment in equities.

Amfi Chief Executive N S Venkatesh said," Retail investors continue to repose trust in mutual funds as reflected by continued flows through SIPs, despite challenging domestic economic scenario and global trade issues and conflicts.

"Markets have rallied and indices scaled new peaks, which is reflective of resolution coming through structural policies like IBC and lowering of interest rates, as also, expectation from Budget,'' he added.

Besides, gold exchange-traded funds saw an inflow of Rs 27 crore in December, while the same was over Rs 7 crore in November.