Income funds and other ETFs pull the asset base down in March 10
The mutual fund (MF) industry registered the highest monthly fall of
19.94% since April 04 in total asset under management (AUM) to Rs 6.14
lakh crore ending March 2010 from Rs 7.67lakh crore in February 2010.
The culprit behind the drastic fall in AUM was the fall in assets of
income funds. Almost all the fund categories except for Income funds,
other ETFs and fund of funds investing overseas witnessed increase in
total assets.
The Average Assets Under Management (AAUM) of mutual fund
industry plunged 4.37% in March 2010 after witnessing 2.64% rise in
February 2010. The fall was largely due to the corporate withdrawing
money to meet their advance tax payment commitments and partly to
balance their accounts book for the financial year. Moreover, huge
dividend payouts by fund houses and banks withdrawal of money from debt
fund category have added for the decline of the industry's assets. Fund
houses had announced dividend for the equity portfolio out of the gains
arisen from the investment in stock market. The industry's assets
depleted almost by Rs 34186.94 crore in March. This is the third time
that the industry's assets have tumbled down after touching a record
high of Rs 8 lakh crore during November 2009. In December 2009, the
industry's assets declined by 1.62% while in January 2010 the assets
fell by 4.14%.
Association of Mutual Funds in India (AMFI) has released monthly
data of the industry for February 2010. The industry has launched 75
new schemes in February, out of which 72 schemes belong to income fund,
one under equity funds and one under gold ETFs and other ETFs category.
The new funds launched mobilized around Rs 14985 crore during the month
under review.
While, out of 9 categories, 6 witnessed rise in AUM, while income
funds, other ETFs and fund of funds investing overseas, recorded a
fall. Income funds witnessed strong depletion in assets by 34.57%,
followed by other ETFs at -28.69% and fund of funds investing overseas
by -0.69%.
The Income funds which registered the highest growth of 30.58% in
January 2010 reported marginal growth of 1.21% during the month of
February 2010 and highest fall in March 2010.
The MF industry recorded the net outflow of Rs 162165 crore in March 2010 against the inflow of Rs 6365 crore in February 2010.
Equity Funds
The total asset of equity funds has increased marginally by 3.19% to
1.74 lakh crore as on March 2010 from 1.69 lakh crore as on February
2010, as both the key market indices, BSE Sensex and S&P CNX Nifty
ended up with gains of 6.68% and 6.64% respectively in March 2010,
compared to marginal gains of 0.44% and 0.82% respectively in February
2010.
The rise in asset base increased the weightage of equity funds to
28% in the total assets of the industry as on March 2010 from 22% in
February. However, the equity funds witnessed a net outflow of Rs 2016
crore and total redemption of Rs 8236 crore in the month of March 2010.
Income Funds
The Income funds that stood in limelight with highest inflow of Rs
1.06 lakh crore in January 2010 witnessed only an inflow of Rs 4887
crore in February but highest net outflow of Rs 1.64 lakh crore during
the month with the redemption remaining quite heavy at Rs 4.81 lakh
crore.
Moreover, the total asset of income fund decreased by whooping
34.57% to Rs 3.12 lakh crore compared to a marginal rise of 1.21% to
4.76 lakh crore in February 2010. Also, the income funds AUM weightage
declined to 51% as that of the previous month at 62%.
Liquid Funds
Liquid funds recorded highest net inflow at Rs 3971 crore in March
2010, after witnessing outflow as against outflow for the three
consecutive months. Liquid funds also witnessed highest redemption of
Rs 6.36 lakh crore as against redemptions of Rs 4.93 lakh crore in
February 2010. The total asset increased by 6.93% to Rs 78094 crore in
March 2010 compared to 2.14% fall in February 2010.
Gilt Funds
The AUM of gilt funds witnessed the highest rise of 7.06% Rs 3395
crore in March 2010 from Rs 3171 crore in February 2010. Gilt funds had
net inflow of Rs 267 crore and redemption of Rs 410 crore for the month
under review. The yields on 10-year Government Stock, 6.35% GS 2020,
eased one basis point to close at 7.85% during March 2010 compared to
27 bps jump in February 2010. The yield hit 17 months high of 8.01% in
mid-March 2010, as the investors were worried about the inflation
potentials of the budget proposals, monetary tightening, borrowing
program of Rs 4.57 trillion for FY 2010-11 and replacement of existing
10-year paper with new paper in FY 2010-11. This restricted the inflows
in the gilt funds.
The yields eased in the second half of March 2010, as liquidity
remained above expectations despite advance tax cash outflows and CRR
hike taking full effect. The revision in outlook on India from negative
to stable by S&P gave a boost to the sentiments. Further, lower
than expected supply of paper planned for April-September 2010 and year
end demand for government securities from banks and financial
institutions helped the yields to ease to seven weeks low of 7.76%.
Other Funds
ELSS-Equity Funds witnessed net inflow of Rs 371 crore registering
6.19% rise in its total assets. Gold ETFs registered net inflow of Rs
45 crore and its total AUM recorded the growth of 0.44% to Rs 1590
crore during the month under review. The total AUM of other ETFs
declined, by robust 28.69% in March 2010. Also, the Fund of Funds
recorded fall in their asset base at 0.69% rise in March 2010. However,
balanced funds continuing the trend, witnessed a rise in their asset
base at 0.61%.
Mutual Funds net selling of equities accelerated to Rs 3806.90 crore
in March 2010 as against net selling of Rs 697.20 crore in February
2010. Of the 20 trading sessions in March, mutual funds were net
sellers in 17 sessions and net buyers in the remaining 3 sessions.
Mutual Funds were net sellers of debt papers worth Rs 3860.9 crore in
March 2010 as against net buying of Rs 11973.70 crore in February 2010.
MFs were buying of debt securities in 13 out of 19 trading sessions.
There was heavy selling in debt papers in the second half of the month.
