Debt funds the only saving grace for MF industry in FY 2012-13

MF industry gains Rs 1.14 lakh crore assets in FY 12-13, mainly in debt funds.

Helped by robust inflows of Rs 90183 crore in debt funds, the mutual fund industry managed to gain Rs 1.14 lakh crore during FY 2012-13, shows SEBI data.

Compared to FY 2011-12 when the industry saw net outflow of Rs 25653 crore from debt funds, in FY 2012-13 debt funds saw net inflows of Rs 90183 crore with an increase of more than eight lakh new folios. Out of this, gilt funds added 29573 folios while liquid funds saw an increase of 12681 folios in FY 2012-13.

Widespread expectations of softening interest rate regime brought gilt funds in the spotlight in 2012 with the category receiving Rs 3975 crore net inflow compared to Rs 20 crore net outflows the previous year. The net assets of gilt funds zoomed 121% from Rs 3659 crore in March 2012 to Rs 8074 crore in March 2013.

Investors turned cautious towards gold as inflows slowed down by 61% to Rs 1414 crore in FY12 compared to Rs 3646 crore the previous year. Gold prices corrected 22% from its highs. There are currently 14 Gold ETFs listed on the exchanges and many AMCs have launched gold fund of funds to channel investments in their respective Gold ETFs.

“There are possibilities of gold correcting further from the current levels and thus the inflows may slow down this year too. If the DTC comes in, FMPs will lose the tax benefits. We will have to compete on  yields with banks if the taxation arbitrage does not exist in the future,” said Akshay Gupta, CEO, Peerless Mutual Fund.

With the increase in dividend distribution tax (DDT) in debt funds to 25 % from June 01, experts say that the tax arbitrage between FDs and debt funds would go down.  

Equity funds lose sheen

As markets gained momentum in 2012, investors cashed out of equity funds resulting in a net outflow of Rs 14587 crore in fiscal 2012-13. The industry saw a drop of more than 44 lakh investor accounts from equity funds. Industry officials attribute this drop to redemptions, folio consolidation and scheme mergers. The net assets of equity funds dropped from Rs 1.82 lakh crore in March 2012 to Rs 1.72 lakh crore in March 2013.

Overall, the industry ended the year on a positive note, helped by inflows in debt funds. The industry received net inflows of Rs 76539 crore compared to net outflow of Rs 22024 crore the previous year.

Industry’s net assets increased 19 % from Rs 5.87 lakh crore in March 2012 to Rs 7.01 lakh crore in March 2013.