Debt funds drive record growth in MF assets

Buoyed by significant growth in debt funds, the mutual fund industry's total asset under management in January rose to rose 9.4 per cent, the highest monthly growth in 15 months.

According to the fund evaluation and risk solutions provider Crisil FundServices, the assets of mutual funds increased significantly in debt funds.

The various categories including bonds, gilts and liquid funds, collectively witnessed their net inflows surging to Rs 67,000 crore in January from Rs 1,150 crore in December.

"The growth in AUM was despite weak equity markets, and on account of strong inflows in debt funds. The current outlook of declining interest rates makes debt funds a popular investment option," the report stated.

The total AUM of the country's 35 mutual fund houses have risen to Rs 4,60,949 crore, following an increase of Rs 39,833 crore, or 9.4 per cent, at the end of January, according to the data of the Association of Mutual Funds in India.

"This is the second consecutive month of growth after the industry witnessed steady de-growth from September 2008 to November 2008," Crisil FundServices said.

Of all the fund categories, the bond funds witnessed the highest inflow of Rs 39,100 crore in January, from Rs 4,500 crore in December.

Liquid or money market funds saw net inflows of Rs 27,100 crore against net outflows of Rs 4,300 crore in December.

According to Crisil, on an aggregate while the equity funds witnessed marginal net outflows, the Equity-Linked Savings Schemes (ELSS) saw net inflows owing to increased investments driven by tax planning requirements.

Also net inflows from all categories for the industry as a whole increased to Rs 66,800 crore in January 2009, from negligible levels in December 2008.

Although the overall MF industry saw an increase in AUMs, 22 of the 35 fund houses reported growth in average AUM.

Country's top house Reliance Mutual Fund saw its AUM rise by Rs 5,960 crore in January to Rs 76,168 core. HDFC MF remained the second big fund house with an addition of Rs 4,663 crore in its AUM at Rs 51,421 crore at January end.

ICICI Prudential Mutual Fund toppled state-run UTI MF as the third largest fund house of the country with an AUM of Rs 47,515.51 crore, after adding Rs 5,638 crore in a month.

According to Crisil although Reliance MF and ICICI Pru MF recorded maximum growth in asset in absolute terms, in terms of rate-of-growth LIC MF and IDFC MF stole the show.

"In terms of rate of growth, reflected in month-on-month growth percentage of average assets, LIC MF and IDFC MF were the leaders, registering 30 per cent and 29 per cent growth in average AUM respectively, between December 2008 and January 2009," it added. PTI