Buoyant inflows in equity and short-maturity debt funds lifted the average assets under management (AUM) of Indian mutual funds in the quarter ended June to a new record and above the Rs 14 trillion mark for the first time, according to numbers released by the Association of Mutual Funds in India (AMFI). At Rs 14.41 trillion, average AUM beat the previous high of Rs 13.53 trillion logged in the previous quarter, and was up 6.47%, or by Rs 875.83 billion – also a record in absolute gain – over the quarter. Gilt and long maturity debt funds saw some shrinkage.
Equity funds recover lost ground
Equity funds sprung back after having logged the first fall in 10 quarters in March, with AUM spurting 7.59%, or by Rs 334.18 billion, to a record Rs 4.74 trillion. Robust inflows of Rs 91.59 billion (April-May data) and mark-to market gains as the equity market (as represented by the Nifty 50) gained over 7% in the quarter, helped.
Short-maturity debt funds sparkle
Short-maturity debt funds logged strong gains, benefitting from a market perception that the trend of easing interest rates in the country was over at least in the short term. Within this universe, ultra short-term and short-term debt funds bucked the trend of subdued growth of late. Short-term debt funds saw assets swell by Rs 100.05 billion to a new high of Rs 1.60 trillion, way above the Rs 15.25 billion growth seen in the preceding quarter. Ultra short-term fund assets rose Rs 139.97 billion to Rs 1.47 trillion, after a decline in the two preceding quarters. Liquid fund assets made a new peak of Rs 3.42 trillion with a gain of Rs 195.75 billon, after having risen Rs 282.70 billion the previous quarter.
Long-maturity debt funds bleed some more
Long-maturity funds – long-term debt and gilt – continued to face the heat for the second consecutive quarter amid views that the Reserve Bank of India (RBI) had cut interest rates adequately, leaving little scope of aggressive rate cuts in coming months. The central bank, which had lowered the key repo rate by 25 basis points in April after status quo since September 2015, kept the rate unchanged at 6.50% in its bi-monthly policy in June with an eye on monsoon, global crude oil prices, macroeconomic and financial developments. Income fund assets shrunk Rs 35.81 billion (lower than the decline of Rs 57.37 billion seen the previous quarter) to Rs 938.73 billion. Gilt fund assets lost a record Rs 21.03 billion to Rs 152.07 billion, breaking the uptrend since December 2014.
FMPs gain for third straight quarter
Assets of fixed maturity plans (FMPs) increased for the third quarter on the trot, up Rs 122.44 billion at Rs 1.43 trillion, after having run up Rs 114.44 billion and Rs 53.06 billion, respectively, in the two preceding quarters because of MTM gains and stable demand. The category, which was negatively impacted by the tax treatment of debt funds announced in July 2014, seems to have stabilized even as demand has reduced in recent periods. In April-May, fund houses garnered Rs 19.39 billion by launching 22 FMPs compared with Rs 182.49 billion through 105 FMPs launched the preceding quarter.
Gold ETFs shine again
Gold exchange traded funds (ETFs) shined for the second consecutive quarter as prices of the yellow metal rose. Gold prices, as represented by the CRISIL Gold Index, rose over 8%. Gold ETF assets gained 1.04%, or Rs 0.66 billion, to Rs 64.01 billion. However investors chose to book profit as seen from outflows of Rs 1.48 billion in April-May 2016.
Direct plan assets cross Rs 5 trillion
Average AUM of direct plans rose to a new high of Rs 5.35 trillion, up 8.06%, or Rs 399.08 billion. The share of direct plans in overall AUM inched up marginally to 37.12% from 36.57% the preceding quarter.
Most fund houses see assets swell
Of the 42 fund houses (including infrastructure debt funds) which have declared average AUM, 31 logged growth. The share of the top five and top 10 rose to 57% and 81%, respectively, from 56% and 80% the preceding quarter.
ICICI MF remains the leader
ICICI Prudential Mutual Fund remained at the top slot in terms of assets, with a gain of 9.90%, or Rs 174 billion, to Rs 1.93 trillion. HDFC Mutual Fund came a close second, just Rs 5 billion behind the leader, with a jump of 9.67%, or Rs 170 billion. Reliance Mutual Fund maintained its third position with Rs 1.67 trillion, up 5.43%, or Rs 86 billion. Assets of industry heavyweights – ICICI Prudential Mutual Fund, HDFC Mutual Fund and SBI Mutual Fund (in this order) – rose the highest in absolute terms.