Buoyed by inflows in income and liquid/money market funds, assets under management (AUMs) of the domestic mutual fund industry crossed the Rs 7-trillion mark in July after a period of one year.
According to latest data by Association of Mutual Funds of India, AUMs in July increased by 6% or Rs 415 billion to Rs 7.30 trillion.
Among the different types of MFs, income funds logged the highest inflows.
For the fourth consecutive month, AUMs of income funds witnessed an increase with inflows of Rs 217 billion in the month. This was the largest inflow in the category in the last 15 months resulting in 7.4% rise in AUMs in July to Rs 3.40 trillion.
The inflows were on account of fixed maturity plan (FMPs), new fund offers (NFOs) as well as investors putting money into dynamic bond funds, short term income funds and ultra short term debt funds.
FMPs continued to garner the majority of the NFOs in the month as investors continued to lock into the prevailing high yields in the market. Out of the 30 NFOs in the month, 28 were FMPs and garnered Rs 24 billion.
However, AUMs of equity funds declined by nearly one per cent or Rs 14 billion to Rs 1.78 trillion on the backdrop of outflows of over Rs 9.5 billion as well as due to mark to market losses. The equity market represented by the benchmark S&P CNX Nifty fell nearly 1% in July, dragged down by weak global and domestic cues.
AUMs of liquid funds rose by 12 per cent or Rs 193 billion to Rs 1.78 trillion helped by inflows of Rs 177 billion in the month. Inflows in the first month of the new quarter is cyclical in nature as historical trend shows that quarter-end outflows in the category are reversed in the subsequent month.
Corporates re-invest their surplus funds that were withdrawn to pay quarter end advance tax.