The Indian mutual fund industry's assets under management (AUM) fell marginally in November 2014 to Rs 10.90 trillion, down 0.49% or by Rs 53.44 billion, from Rs 10.96 trillion in October 2014 according to the monthly numbers released by the Association of Mutual Funds in India (AMFI). "The decline in assets was primarily due to net outflows from liquid funds; gains in most other categories helped cap the loss," said CRISIL.
Liquid funds' AUM fell 18.17%, or by Rs 506.58 billion, to Rs 2.28 trillion due to net outflows of Rs 524.60 billion during the month. The fall in liquid fund assets offset the overall gain of the industry made by inflows and market to market (MTM) gains in other categories.
Income funds, which had been facing redemption pressure following the tax changes announced in the Union Budget, saw strong inflows for the second consecutive month. The category logged net inflows of Rs 198.44 bn - highest since May 2013 - on falling yield (rise in prices) amidst growing expectations of an interest rate cut by the Reserve Bank of India (RBI).
The central bank, however, kept interest rates unchanged in its latest monetary policy announced on Dec. 2, 2014. The category's assets rose 5.17% or by Rs 246.27 bn to Rs 5 trillion.
Gilt funds too benefitted from falling yield. The category attracted net inflows of Rs 8.14 billion; the highest net inflows in the past 15 months. The yield of the 10-year benchmark 8.40% 2024 bond fell to 8.09% on Nov. 28, 2014 from 8.28% on October 31. Inflows clubbed with MTM gains resulted in 15.28% or Rs 9.41 bn rise in its assets to Rs 70.99 billion.
Equity funds continued to attract net inflows (Rs 49.63 billion) for the seventh consecutive month in November on the backdrop of positive sentiment for the asset class. The positive sentiment also led to increase in new fund offers (NFOs), which too contributed to inflows.
The latest month saw the launch of four equity NFOs (one open-ended and three close-ended) garnering a total of Rs 10.14 bn, lower than 10 NFOs (four open-ended and six close-ended) collecting Rs 21.97 billion in October.
Inflows and MTM gains led the category up 5.90% or by Rs 175.24 billion to Rs 3.15 trillion in November, the highest asset tally for the category on record. The underlying asset class, represented by the benchmark CNX Nifty Index, gained 3.20% in the month on positive domestic and international cues.
Balanced funds, which invest a major portion of their AUM in equity, also benefited from the ongoing uptrend in the equity market as the category fetched inflows for the sixth straight month. Net inflows of Rs 8.79 billion coupled with MTM gains boosted the category's assets by Rs 16.89 billion to Rs 227.69 billion. The category's standard benchmark, represented by CRISIL Balanced Fund Index, rose 2.63% in the month.
Despite gold ETFs continuing to witness redemption for the 18th straight month, the category's AUM ended up 0.41% to Rs 70.60 billion due to MTM gains. The price of gold (represented by the CRISIL Gold Index) rose 1.21% in November.
Assets of fund of funds investing overseas fell 1.30% to Rs 28.19 billion in the month due to net outflows of Rs 1.28 billion (sixth consecutive monthly outflow).
