Income funds draw huge response in Dec quarter, AUM rises 111%
The quarterly average AUM of income funds covered under the Crisil Mutual Fund Rankings rose 111%, quarter-on-quarter, to R33,563 crore, the highest AUM gain in the category over the past eight quarters.
The rise in AUM by R17,702 crore was mainly due to inflows from high networth individuals (HNIs) and corporates in anticipation of a reduction in interest rates from the Reserve Bank of India (RBI) in its monetary policy on January 29, 2013, according to Crisil Research.
Income funds have also increased their maturity as portfolios with higher maturity would earn superior returns in a falling interest rate scenario. During the quarter, the category increased their average maturity to 8.40 years, the highest in the past three years.
Bond prices (fund NAVs) and yields move in opposite directions, owing to which a fall in interest rates will result in a rise in bond prices and positively impact long-term debt fund returns. Over the quarter, the yield of the 10-year benchmark government bond 8.15%, 2022 eased by 10 bps to 8.05%. The 10 year bond has subsequently moved down to 7.88% as of January 24, 2013.
Another portfolio trait observed in the category was the
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