Mutual Funds hold shares worth over Rs 3.4 lakh crore

The Indian mutual fund industry’s assets under management (AUM) rose 12% or by Rs 1.30 trillion in January 2015 to Rs 11.81 trillion, according to the monthly numbers released by the Association of Mutual Funds in India (AMFI).

The total shares held by mutual funds in pure equity funds were worth over Rs 34,00,00,00,00,000 (3.4 lakh crore).

The latest asset tally is the highest on record driven by inflows and mark-to-market (MTM) gains in liquid, income and equity fund categories.

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Inflows to the tune of Rs 858 bn helped liquid funds become the biggest contributor to the industry AUM in the latest month. Cyclical inflows and MTM gains boosted liquid funds’ AUM by Rs 869 bn to Rs 2.65 trillion.

“Historical trend has shown that quarter-end outflows in the category are reversed at the start of the quarter as banks and corporates re-invest the surplus funds they had withdrawn to meet quarter-ended reserve requirements and payment towards advance tax outflows, respectively,” pointed out CRISIL, a ratings agency.

Income funds logged net inflows of Rs 122 bn on falling yield (rise in prices) aided by the surprise interest rate cut by the Reserve Bank of India (RBI); the central bank cut its key benchmark rate – repo – by 25 bps to 7.75% on January 15, 2015.

It also stated that once the monetary policy stance shifts, subsequent policy actions will be consistent with this stance subject to supportive data of falling inflation and fiscal consolidation, pointed out CRISIL. Inflows coupled with MTM gains helped the category assets gain 3.60% or Rs 181 bn to a record high AUM of Rs 5.20 trillion.

Gilt funds too benefitted from falling interest rates; the yield of the 10-year benchmark 8.40% 2024 bond fell to 7.69% on January 30, 2015 compared with 7.86% on December 31, 2014.The category attracted net inflows of Rs 18.13 bn – the fifth consecutive month of net inflows for the category. Inflows clubbed with MTM gains resulted in 23% or Rs 20.5 bn rise in assets to Rs 111 bn, the highest asset tally for the category on record.

Equity funds continued to attract net inflows (Rs 63.24 bn) for the ninth consecutive month in January on the backdrop of positive sentiment for the asset class. Inflows and MTM gains led the category up 6.72% or by Rs 215 bn to Rs 3.41 trillion in the latest month, the highest asset tally for the category on record. The underlying asset class, represented by the benchmark CNX Nifty Index, gained 6.35% in the month on positive domestic and international cues.

Balanced funds, which invest a major portion of their AUM in equity, also benefited from the ongoing uptrend in the equity market as the category fetched inflows for the eight straight month. Net inflows of Rs 8.35 bn coupled with MTM gains boosted the category’s assets by Rs 13.02 bn to Rs 258 bn. The category’s standard benchmark, represented by CRISIL Balanced Fund Index, rose 4.74% in the month, the agency said.

Assets of fund of funds investing overseas fell by 6.3% or Rs 1.68 bn to Rs 25 bn due to net outflows of Rs 1.02 bn (eight consecutive monthly outflow).