Despite the monthly asset under management (AUM) of fund houses surging by over 5% in June, huge redemptions were seen in income and money market funds, while inflows were seen in the equity and balanced funds owing to improved market conditions.
In June, income funds saw redemption of Rs 51,021 crore and money market funds witnessed redemption of Rs 34,378 crores. K Ramkumar, VP and head of fixed income at Sundaram BNP Paribas Mutual fund said, ?Always, during the final month of a quarter, we witness a huge redemption in the income and money markets funds. It is largely because banks and corporates, who have parked their money for tax benefits, remove it from the schemes.?
He however added that in the first few day of July, a good amount of money was coming in the income and money market funds. In the month of June there were redemptions of Rs 83,937 crore, compared to net inflows of Rs 30,148 crores in May.
Despite redemptions in the income and money market funds, inflows were seen in the equity schemes. Gopal Agrawal, head equity at Mirae mutual fund said, ?After the elections results in May we have seen the condition of equity markets improving and some inflows coming in. The money has started coming in but we expect much more inflows in the coming months.?
Though inflows were seen in the equity schemes, only Rs 494 crore was collected through new fund offer (NFO) in June, compared to Rs 1,462 crore in May. Some of the market players say, from the month of August the number of NFOs entering the market may decline, after the market regulator banned entry load in all the schemes.
In June the AUM stood at Rs 6,70,993.13 crore, gaining Rs 31,863.31 crore or 4.98%, compared to Rs 6,39,129.81 crore in May. In spite of improved market conditions in the past few months, the markets remain volatile. In the coming days everything will depend upon the revival of US economy, monsoon and quarter earnings.