Equity retreat shaves Rs 1,120 crore of MF assets

The decline in AUM would have been worse, had it not been for the surge in assets of income and liquid funds, and ETFs

The volatility in the stock market has taken a toll on the mutual fund industry,  with assets under management (AUM) falling by Rs 1,121 crore to Rs 12.74 lakh crore in January 2016, according to data available from the Association of Mutual Funds in India (Amfi).

The decline in AUM would have been worse, had it not been for the surge in the assets of income, liquid and exchange-traded funds, including gold ETFs.

"Not surprisingly, equity funds were battered, and their AUM fell 5.25 per cent to Rs 3.84 lakh crore, marking the biggest percentage decline in the last 35 months. In absolute terms, AUM shrank Rs 21,312 crore, or the most in 7 years, as mark-to-market losses surged,"said Crisil in a note on Friday.

Balanced funds remain attractive, though their AUM lost 2.5 per cent, or Rs 1,072 crore, to Rs 41,121 crore, primarily due to losses in equity assets. However, investors don't seem perturbed, as the category still managed to attract Rs 880 crore, marking the twentieth consecutive month of net inflows.

Redemption pressures persisted for global funds -- or fund of funds that invest abroad -- as concerns over global recovery continued to spook investors. The category saw its twentieth straight month of outflows in January. Its AUM, which had touched an all-time high of Rs 3,226 crore in June 2014, shrank 42 per cent to Rs 1,877 crore.

The AUM of income funds rose 3 per cent, or Rs 1,660 crore, to Rs 5.72 lakh crore, driven by inflows and mark-to-market gains. January saw an inflow of Rs 15,000 crore, which is a rebound considering that in December 2015, there was an outflow of Rs 25,875 crore.

AUM of liquid funds edged up 1.6 per cent, or Rs 3,732 crore, to Rs 2.37 lakh crore, aided by net inflows of Rs 24,550 crore.

Gold ETFs surged almost 6 per cent, or Rs 323 crore, to Rs 6,096 crore, led by gain in underlying asset prices. Gold prices, represented by the CRISIL Gold Index, rose 6.9 per cent in January. The category, however, continues to haemorrhage, clocking an outflow for the 32nd straight month at Rs 81 crore.

AUM of ETFs swelled to a new high at Rs 12,645 crore, gaining primarily from the Employees' Provident Fund Organisation's (EPFO's) decision to invest in the equity market through them. AUM rose 6.4 per cent, or Rs 758 crore, led by an inflow of Rs 1,385 crore. Gains, however, were capped by mark-to-market losses, added the CRISIL report.