MF assets see highest monthly rise since April 2013

AUM grew by 11% in October

The assets under management (AUM) of the mutual fund industry grew by about 11% in September, the highest since April this year. The rise in the AUM was led mainly by a rise in the assets under liquid and money market funds.

According to data on the AMFI website, the total AUM of the industry stood at Rs 8.3 trillion at the end of September, up about Rs 88,000 crore from the previous month. The AUM under liquid funds rose to Rs 1.8 lakh crore from Rs 1.2 lakh crore during the same period.

Analysts said that the rise in liquid funds was due to the funds coming back into the system after the advance tax-payment by institutional investors.

“Historical trend has shown that quarter-end outflows (September) in the category are reversed in the subsequent month (October) as banks and corporates re-invest the surplus funds they had withdrawn to pay their quarter-end financial and advance tax, respectively,” said a report on the industry AUM by CRISIL.

Also, in October the RBI further cut the marginal standing facility, the short-term borrowing rate, freeing liquidity into the system. The central bank took other liquidity easing measures like providing additional liquidity through term repos of 7-day and 14-day tenor.

The AUM under equity funds also saw an increase of about 6.3% to Rs 1.7 lakh crore. However, outflows from these funds continued on a month-on-month basis.

“Assets of equity funds (including ELSS funds) increased sharply, by nearly 7% on the back of mark-to-market gains in the underlying market. The equity market, represented by the CNX Nifty Index, rose almost 10% in the month (its sharpest gains since January 2012) due to strong buying by foreign institutional investors amid RBI’s latest liquidity easing measures. Further gains for the category were however capped as investors continued to redeem and exit after the recent gains,” said the CRISIL report

The category saw outflows of over Rs 3,225 crore in October, the highest for equity funds in the past 13 months.

Gold exchange-traded funds were the only category to see a decline in AUM of about 5% to Rs 9,894 crore. This was on the back of mark-to-market losses as well as recent volatility in prices which kept investors at bay.