Mutual fund industry assets reach all-time high in January

Thanks to robust inflows in liquid and income funds, mutual fund industry’s assets grew by Rs. 83,534 crore from Rs. 8.66 lakh crore in December to touch an all-time high of Rs. 9.03 lakh crore in January 2014.

During the December quarter end, the industry saw net outflows of Rs. 66313 crore from liquid funds. Corporates and banks generally pull out money during quarter end for liquidity requirements. In January 2014, the industry received Rs. 77,494 crore net inflows in liquid funds.

There was some bit of relief for equity funds. Equity mutual funds saw net inflows of Rs. 496 crore in January. The gross redemptions from equity funds came down to Rs. 3,755 crore in January compared to Rs. 4,242 crore in December. The redemptions were less as the Sensex dipped 657 points in January. Investors are increasingly tending to cash out whenever there is an upside and hold on when markets dip.

There were four equity funds which hit the market in January - IDFC Equity Opportunity Series 2, Reliance Closed Ended Equity Fund - Series B, Sundaram Select Micro Cap Series I and Series II. These funds collectively mopped up Rs. 472 crore. DWS Inflation Index Bond Fund mopped up Rs. 27 crore while FMPs collected Rs. 11,275 crore.

Due to subdued returns, Gold ETFs are seeing unabated outflows since June 2013. According to Value Research, Gold Funds have delivered -6% return over a one year period. “Gold is expected to underperform so that’s the reason why investors are pulling out. With the Federal Reserve announcing tapering of quantitative easing the US market has turned attractive for FIIs. FIIs have been gradually selling government of India securities gradually,” said Killol Pandya, Senior Fund Manager, Debt, LIC Nomura Mutual Fund.

With the rise in interest rates gilt funds seem to be losing their sheen. The category has seen net outflows in December and January. “Interest rates are going to remain stick for a while. Institutional investors are moving out of gilt funds since they are seeing better opportunities in FMPs,” said Dhawal Dalal, EVP & Head – Fixed Income, DSP BlackRock Investment Managers.

Net inflow/outflow