Though the assets under management (AUM) of the mutual fund industry touched an all-time high of over Rs 8 lakh crore during the middle of the current financial year, its growth trajectory came under pressure as the AUM fell marginally to Rs 7,65,000 crore in January 2010. The growth in AUM will continue to be under pressure in the months to come as the systemic liquidity in the market is expected to be lower than the earlier levels due to sudden spurt in banks’ credit growth, said Crisil in its post-Budget analysis.
Assets under management grew by 65% on an average till January 2010 compared with the same month last year largely on the back of inflows into debt funds as well as mark-to-market gains in equity funds following the close to 80% rise in the benchmark indices. High systemic liquidity too helped fund houses increase their corpus. The industry recorded net inflows of Rs 1,74,200 crore, out of which Rs 1,72,700 crore were in debt-oriented funds (mainly ultra short-term debt schemes).
“Going forward, systemic liquidity is expected to be lower than the levels seen in the last several months because of factors such as bank credit growth picking up and the inflation control measures of the government. Consequently, increasing the AUM would be a challenge for the mutual fund industry,” the credit rating agency maintained.