AUM up 8% on liquid fund inflows, mkt gains in equity fund

CRISIL Research has come out with its report on 'AUM up 8% on liquid fund inflows, market gains in equity funds'.

The mutual fund industry's month-end assets rose by over 8% or Rs 477 billion to Rs 6.59 trillion in January 2012 on the back of inflows in money market funds and mark-to-market gains in equity funds.

Expectedly, money market funds witnessed inflows of Rs 264 billion in January. As seen historically, quarter-end outflows in the category are reversed in the subsequent month (December witnessed outflows while January saw inflows) as corporates re-invest their surplus funds that were withdrawn to pay advance tax. As a result, assets under money market funds rose to Rs 1.48 trillion compared with Rs 1.21 trillion in December.

Mark-to-market gains in equity funds was another positive factor for mutual funds in January. The equity market represented by the benchmark S&P CNX Nifty rose around 12% in the month on the back of positive global and domestic cues. This is the first monthly gain for the equity market since October 2011. Assets under equity funds surged by Rs 184 billion or 11% to Rs 1.80 trillion, primarily due to rise in the underlying markets.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gilt funds record highest inflows since September 2010

Gilt funds recorded the highest inflows since September 2010 of over Rs 5.21 billion in January, the second consecutive month of inflows. Sentiments for gilt funds have risen on views of peaking of interest rates and easing of monetary policy going forward. This is expected to benefit long-term debt funds including gilt funds. The 10-year benchmark gilt yield has fallen nearly 50 basis points since November 2011 (prices / fund returns are inversely related to yields). Assets of gilt funds rose around 20% in the month to Rs 37.31 billion in January.

Income funds see outflows for the third consecutive month

Income funds (including ultra short-term debt funds) saw outflows of Rs 29 billion in January, the third consecutive month of outflows for the category. This is the first time since November 2008 that the category has witnessed outflows for three consecutive months. A reason for outflows could be investor preference to move out of ultra short-term debt and short-term funds present in this category towards other long-term debt avenues on views of peaking of interest rates in the domestic economy.

FMPs continue to garner major share in NFOs

Fixed Maturity Plans (FMPs) continued to garner majority of the new fund offers (NFOs) in the month. In January, 49 FMPs were launched garnering Rs 78.44 billion compared with three other NFOs launched, which in total garnered only Rs 6.57 billion. The number of FMPS launched in January was, however, less than 84 FMPs launched in December 2011.

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