Mutual Funds: Gilt fund assets up 145% in 5 mths
Mutual funds have gradually raised their exposure to gilts over the past year, anticipating a cut in interest rates.
According to Sebi data, total investments of mutual funds in government securities rose from R5,716 crore (or 1.4% of debt fund’s total AUM) at the end of 2011 to R47,699 crore (or 8.89% of debt fund’s total AUM) at the end of 2012 — making it more than an eight-fold increase over the time period.
Gilts, or government bond funds, registered good inflows in the past few months. After seeing lackluster inflows in the first half of 2012, inflows into these funds picked up as the gilt funds registered a cumulative net inflow of R4,600 crore from October 2012 to February 2013. The assets of gilt funds grew 145% — from R3,356 crore at the end of September to R8,238 crore at the end of February, according to a Morningstar report.
Individual gilt funds saw robust growth in assets. Assets of DWS Gilt fund rose over 12,000% from R9.84 crore in September to R1,246 crore at the end of February, according to Morningstar. Assets of ICICI Pru Gilt Trs, Kotak Gilt Investment Regular and ICICI Pru Gilt Inv PF funds rose 682%, 216% and 157%, respectively, in the same period.
“The recent policy stance by the RBI has increased the appetite for gilts, to capitalise on the downtrend in interest rates. Gilts tend to be quite sensitive to interest rate movement and a preferred avenue in such a market environment. Mutual funds have also warmed
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