Income funds AUM crosses Rs 6 lakh cr mark on strong inflows

Helped by robust inflows, the asset base of Income funds rose 6.4 percent to cross the Rs 6 lakh crore mark, for the first time, at the end of April, according to a report by Crisil.

The Income fund, accounting for 42 percent of the industry pie, had an average assets under management (AUM) of over Rs 5.64 lakh crore at March-end.

The report attributed the surge in monthly assets base to robust inflows and mark-to market (MTM) gains.

"At Rs 6.02 lakh crore the category's AUM was up by 6.4 percent following the biggest monthly inflow of Rs 31,448 crore in five years," the report noted.

An income fund is an investment vehicle that emphasises current income, either on a monthly or quarterly basis, as opposed to capital appreciation. Such funds hold a variety of government, municipal and corporate debt obligations, preferred stock, money market instruments, and dividend-paying stocks.

Apart from Income funds, Liquid funds' assets climbed 69 percent to Rs 3.37 lakh crore on a cyclical net inflow of Rs 1.34 lakh crore, which was the biggest in five years.

Historically, the category sees heavy outflow towards the end of the March quarter and these are reversed in April as banks and corporates re-invest the surplus funds they had withdrawn to pay their financial and advance taxes, respectively.

These buoyant inflow has helped the mutual fund industry grow its AUM to a record Rs 14.22 lakh crore in April. This marked the biggest absolute rise in five years, though in percentage terms, the 15.3 percent growth was way short of the 17.7 percent jump logged in April 2013.