The mutual fund industry’s month-end assets under management (AUM) recovered most of their losses in September to gain around 7% (R48, 000 crore) to R7.68 lakh crore in October 2012. This is the highest month-end AUM of the industry since April 2011.
The rise was due to inflows of R46,700 crore, most of it to income and liquid funds. The numbers were part of the monthly data released by the Association of Mutual Funds in India (Amfi).
Most inflows seen in income funds: Income funds reported the highest inflows among mutual fund categories at R293 billion. The category assets increased around 9% (R31,100 crore) to R3.84 lakh crore in October. With the Reserve Bank of India (RBI) maintaining a status quo on interest rates in the latest monetary policy, investors continued to prefer dynamic bond funds and short-term and ultra short-term debt funds within the category. These funds benefit when there is interest rate uncertainty.
Equity funds register outflows for the fifth month in a row: Equity funds registered outflows for the fifth consecutive month in October due to profit booking by investors. In the latest month, the category saw outflows of R20 billion (R3,600 crore in September and over R9,000 crore in the past five months) with assets falling to R1.84 lakh crore. The benchmark S&P CNX Nifty has risen over 21% on a year-to-day basis and by over 7% over the past three months ended October 31, 2012. However, the index fell 1.5% in the latest month due to weak domestic indicators.
Gilt funds witness highest monthly inflows in four years: Gilt funds saw inflows of R1,000 crore, the highest monthly inflows in the category since October 2008. The category assets rose 31% to around R4,400 crore at the end of the month. The category is expected to benefit when the RBI reverses its stance on interest rates as prices and yields move in opposite directions. A fall in interest rates would result in a rise in bond prices and positively impact gilt fund NAVs.
Liquid funds saw cyclical inflows: Liquid funds saw inflows of R18,200 crore in October, taking the category assets up by around 14% to R1.64 lakh crore at the end of the month.
Gold ETFs post highest monthly inflows over a year: Gold exchange-traded funds (ETFs) saw inflows of R300 crore in October (R332 crore in September), the highest monthly inflows in the category since October 2011.