After witnessing a robust growth in the month of April, the mutual fund asset base continued to rise in the following month. The growth did seem to look like it has lost momentum as compared to the previous month but it was mainly the significant inflows (return of banks and financial institutions) witnessed in the month of April that swelled the mutual fund kitty in that month. A scenario witnessed every quarter end. The total industry asset under management grew by over 5% in May to comfortably stay above the 800,000 crore mark at Rs 868,426 crores. Yet again the rise in asset base was majorly accounted by the debt oriented fund categories which continued to see strong inflows.
However what continues to be a cause of concern is the ever declining equity asset base. Rise in markets seems to be coming off to investors as profit booking opportunities rather than making investments or staying put. As a result the overall share of the equity base in the overall mutual fund AUM has declined substantially in the past few months. It was only in the month of March that the category witnessed inflows post which it went back to declining spree.
The month of May saw net inflows of Rs 37,435 crores as compared to Rs 106,574 crores in the previous month. The net flows were clearly dented by strong outflows in the equity category.
Inflows continue however Gilt funds take a hit
The overall movement in the mutual fund industry has been so far primarily led by the debt oriented fund categories and this month was no different. The total inflows from debt catgeories was Rs 41,118 crores which was mainly contributed by the Liquid and Income funds while the Gilt category witnessed net outflows.
Liquid funds emerged as the top category in terms of AUM growth. The category AUM grew close to 12% to Rs 205,863 crores for the month with net inflows of around Rs 20,697 crores. Inflows, if compared to previous month seemed to have slowed down. However the industry has been witnessing this trend for long now with the month after quarter end garnering huge inflows driven by the return of banks and financial institutions who withdraw their investments to meet their quarter end tax obligations.
Income fund category, largest by market share, too registered robust asset growth of around 6% pulling its asset base to Rs 447,199 crores. The category witnessed steady inflows as compared to the previous month. The total inflows amounted to Rs 20,919 crores as against Rs 20,519 crores in the last month. On a year-on-year basis, this category reported second highest AUM growth. The overall market share of this category has gone up significantly to 51% as compared to 45% a year ago.
Gilt was the only category within debt portfolio to have registered a fall in both asset base and flows. The category which remained in flavour with the ongoing interest rate scenario, lost investor interest after hawkish stance taken by the Reserve Bank of India with regards to cutting key rates in the days ahead. The Gilt fund category saw outflows of Rs 498 crores and a drop in its AUM by 2.8%.
Equity funds dropped despite rising markets
Equity funds just don’t seem to be giving up their losing spree. Improving markets are proving to be coming as profit booking opportunities for the investors as the category yet again witnessed outflows despite rising markets. The equity funds saw net outflows of Rs 3,695 crores much higher than what it was in the previous month.
Equity fund category alone saw net outflows of Rs 2,910 crores while the ELSS and Balanced fund cateories witnessed net outflows of Rs 447 crores and Rs 338 crores respectively. The AUM of all the three categories (Equity, ELSS and Balanced) too dipped by 1.9%, 1.2% and 1.4% respectively. As such the overall market share of equity fund categories came down to 23% in May 2013 as against 27% in the corresponding period last year.
Gold ETF AUM drops, marginal inflows
Gold prices globally continued to remain under pressure as a string of weak economic data from US and Europe too suppressed appetite for the precious metal. As a result of which investors continue to remain wary of investing in what was once their favourite investment avenue. This month however witnessed marginal inflows but the asset base continued to drop. After seeing net outflows for the last three month, the month of May saw inflows of Rs 5 crores. The AUM however declined by 0.5% better than a 8.7% drop in the previous month.