Mutual funds’ assets under management has declined by 0.40 per cent to Rs 18.96 trillion in June from Rs 19.04 trillion in May, as investors pulled out around Rs 16,592 crore across categories in the month. But the industry is not worried saying this seems to be quarter-end trend as more investors are going in for redemptions around this time. According to Amfi data collated by domestic rating agency Icra, during the past 18 quarters, the third month of each quarter saw decline in AUMs in 16 quarter. In June this year, high redemptions were seen in income and liquid fund categories. The month, the report said, saw investors prefer equity, ELSS and balanced funds over the money market category because of low yields on the latter. Consequently, the money market segment witnessed net outflow of Rs 12,739 crore in the month, while balanced, equity and equity linked savings schemes (ELSS) saw strong inflows of Rs 7,458 crore, Rs 7,453 crore and Rs 711 crore respectively. According to the report, retail participation has remained strong as inflows through systematic investment plans (SIPs) have been at a robust Rs 43,921 crore in fiscal 2017 and Rs 4,584 crore in May.
Since April 2016, net inflows into the balanced category was at Rs 58,867 crore as investors seem to prefer it for higher risk adjusted returns. Net inflows in equity remain high equity funds (including ELSS) witnessed net inflows of Rs 8,164 crore in June. Though the inflows are 24 per cent less than the previous month, the figure is encouraging considering the overall flat markets, the report said. Total folio count as of end-June stood at 5.82 crore, 1.8 per cent higher than in May. Growth was primarily on the back of 7.84 lakh new folios added to the equity category (including ELSS) and 1.91 lakh new folios to the balanced category.
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Since April 2016, 58.3 crore new folios were added to the equity and ELSS categories, the study said. The only categories to witness de-growth in folios was gold ETFs and fund of funds investing overseas. The drop in count was 4,250 and 1,887, respectively, from May. Gross commission, as per the report, has almost doubled in last three years for top distributors. As per Amfi data, gross commission earned by MF distributors has almost doubled in the last three years from Rs 2,603 crore in fiscal 2014 to Rs 4,987 crore in fiscal 2017.
Top 10 distributors were given Rs 2,379 crore commission by AMCs in fiscal 2017, representing 47.72 per cent of the total fees paid to distributors. In the last three financial years, average AUM of top 10 distributors have increased from Rs 1.43 trillion to Rs 2.74 trillion. The industry’s assets are almost equally distributed between retail/HNI investors and institutional investors at Rs 8.7 trillion and Rs 8.8 trillion respectively, as of March.