The decline in AUM is largely due to outflows seen in debt funds with banks and corporates pulling the money out at the end of quarter.
The mutual fund industry saw its overall assets under management (AUM) decline by 6.5% to `24.25 lakh crore in June. In May, the industry’s AUM stood at `25.93 lakh crore.
The decline in AUM is largely due to outflows seen in debt funds with banks and corporates pulling the money out at the end of quarter. While industry heads claim this is a quarterly phenomena, there is no denying that there is nervousness in the market.
Open-ended debt-oriented schemes saw outflows of `1.71 lakh crore in June, while liquid funds saw outflows of `1.52 lakh crore. At the end of every quarter, liquid funds witness some pressure and in March it had seen outflows of `51.343 crore. While in September and December 2018, outflows were higher at `2.11 lakh crore and `1.48 lakh crore, shows Amfi data.
Swarup Mohanty, chief executive officer of Mirae Asset Global Investments (India), said: “It is a quarter-end phenomenon and we expect flows to come back again. However, we can’t also deny nervousness in the debt market which could be also one of the reasons for the outflows from debt funds.”
In the months to come, assets under management (AUM) of liquid funds might come down after the market regulator’s announcement of graded exit load levied on investors of liquid schemes who exit the scheme up to a period of seven days.
“Going forward, we might see money being invested not only in liquid funds, but also in money market and overnight funds,” said Mohanty. Liquid funds saw outflows of `1.52 lakh crore, while overnight funds and low duration funds witnessed outflows of `4,062.55 crore and `4,689.22 crore, respectively, in June.
In equity-oriented schemes, only dividend yield funds saw marginal outflows of `11.19 crore, while inflows were seen in other categories like multi-cap funds, large cap funds and mid and small cap funds. The Amfi data show that equity-oriented schemes saw inflows of `7,663.14 crore in June.
NS Venkatesh, chief executive at Amfi, said: “Stellar jump in inflows into equity schemes over the last two months, especially after the decisive electoral verdict, has helped repose retail investor trust.”
The contribution of systematic investment plans (SIPs) for June 2019 stood at `8,122.13 crore coming from 2.73 crore SIP accounts. SIPs contributed `8,183 crore and `8,238 crore in May and April, respectively.