MF assets claw back to Rs 12 trillion mark: CRISIL

The Indian mutual fund industry’s assets under management (AUM) rose 1.4% in May 2015 to reclaim the Rs 12 trillion mark and close at its record high as per the latest numbers declared by the Association of Mutual Funds in India (AMFI). The increase was primarily propelled by inflows in equity and income funds. Outflows in liquid funds, though, capped further gains.

Equity funds scale new highs

Investors continued to pump money into equity funds despite volatility in the asset class in recent months. The category logged inflows for the 13th consecutive month in May, with Rs 100.76 billion flowing in. Cumulatively, the category has seen inflows of Rs 918.49 billion over the 13-month period. Equity funds’ AUM rose 5.8% or Rs 200.37 billion to a record high of Rs 3.65 trillion in May, buoyed by higher inflows and mark to market (MTM) gains. Although ridden with volatility, the market as represented by the CNX Nifty gained 3.1% in May, after the benchmark fell 3.7% and 4.6%, in April and March, respectively.

Balanced funds also ride positive wave

Positive sentiment for equity funds rubbed off onto balanced funds, which invest a major portion of their AUM in equity. The category attracted net inflows of Rs 12.02 billion in May, marking the 12th consecutive month of gains. The category’s AUM went up 6.4%, or Rs 17.34 billion, to a new high of Rs 287.49 billion.

Gilt, income funds gather steam

Gilt and income funds logged inflows on growing expectation that the Reserve Bank of India (RBI) would cut the interest rate amid falling inflation and to boost economic growth. The central bank subsequently lowered the key repo rate by 25 basis points (bps) to 7.25% at its policy review meeting on June 2. Inflows of Rs 8.75 billion helped gilt funds’ AUM boast a new high of Rs 156.52 billion. Income funds’ AUM rose 1.5% to Rs 5.22 trillion, led by inflows of Rs 42.05 billion.

Outflows in liquid funds cap gains

Net outflows of Rs 156.57 billion in liquid funds capped gains in the industry’s overall AUM. The category’s AUM dropped 4.8% to Rs 2.54 trillion.

Gold ETFs continue to see outflows

Gold exchange traded funds (ETFs) have been weighed down by net outflows since May 2013. Negative sentiment continued to prevail in May 2015 as well due to the yellow metal’s discouraging performance. The category’s AUM fell 1.9% to Rs 66.88 billion due to net outflows of Rs 0.86 billion and MTM losses. The price of gold (represented by the CRISIL Gold Index) fell 0.3% in May.

Table 1 – Month-on-month mutual fund flows and AUM distribution

-CRISIL Research