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Mutual Funds Close In On Rs.12 Trillion Assets Mark

Monday, April 06, 2015
By A Business Reporter

Average assets under management (AUM) of the mutual fund industry in India logged its sixth consecutive quarter of growth, rising 7.4%, or Rs 822.56 billion, to Rs 11.89 trillion (excluding fund of funds) in the three months ended March, as per data released by the Association of Mutual Funds in India (AMFI) said Crisil in its recently released report.

According to it, for the fiscal ended March, the industry posted an increase of 31.3%, or Rs 2.83 trillion, in AUM – the fastest run-up since AMFI started declaring quarterly average assets in September 2010. Growth in the latest quarter was driven primarily by a surge in equity assets, though a slide in fixed maturity plans (FMPs) and gold exchange traded funds (ETFs) capped the gains.

Equity funds were the primary booster for the industry as the category continued to attract investor interest on an uptrend in the underlying asset class. The category’s average AUM rose to a record high of Rs 3.81 trillion, up 13.48%, or Rs 453.04 billion, during the quarter, riding on healthy inflows (Rs 151 billion in January-February 2015) and mark-to-market (MTM) gains. The domestic equity market, as represented by the CNX Nifty, gained 2.5% in the quarter.

Long-duration debt funds and gilt funds posted growth for the second consecutive quarter. Long-term debt funds’ average AUM gained 26.78%, or Rs 187.59 billion, to Rs 888.06 billion, while the gilt funds’ AUM rose to the highest level ever (since September 2010) at Rs 114.29 billion, up 63.66%, or Rs 44.46 billion. Both categories benefitted from progressive inflows amid a reduction in policy rates by the Reserve Bank of India (RBI) and hopes of further cuts. The apex bank cut the benchmark repo rate twice by 25 basis points each to 7.50%.

Short-term debt funds and ultra-short term debt funds sustained their uptrend for the fourth consecutive quarter. Short-term debt funds’ assets surpassed the Rs 1 trillion mark in the latest quarter to Rs 1.11 trillion, up 15.55%, or Rs 149.35 billion, while those of ultra short-term debt funds grew 3.49%, or Rs 39.97 billion, to Rs 1.19 trillion.

Liquid funds posted a marginal rise in average AUM after a slide the previous quarter. The category’s AUM rose Rs 10.71 billion to Rs 2.72 trillion in the latest quarter.

Changes announced in the previous budget (July 2014) – including an increase in long-term capital gains tax on debt-oriented mutual funds to 20% from 10% and a change in the definition of 'long term' for debt mutual funds to 36 months from 12 months – continued to weigh on the assets of fixed maturity plans (FMPs). The category’s AUM fell for the third consecutive quarter in March – shedding 5.35%, or Rs 84.63 billion, to close at Rs 1.50 trillion.

Gold ETFs continued their downtrend, marking the sixth consecutive quarter of fall as investors shied away from the category due to subdued performance. The category’s AUM fell 2.53%, or Rs 1.81 billion, to Rs 69.97 billion due to persistent outflows and MTM losses. Gold prices, as represented by the CRISIL Gold Index, fell 3.18% in the quarter.

Average AUM of direct plans rose 7.68%, or Rs 282.64 billion, to Rs 3.96 trillion at the end of March. The share of direct plans, however, remained stable at 33% of the industry’s AUM (excluding fund of funds) compared with the previous quarter.

Of the 43 fund houses (including IDFs) that declared their average AUM, 35 logged growth. The share of the top five rose to 56% from 55% the previous quarter, while the share of the top 10 remained unchanged at 79%.

HDFC Mutual Fund topped the table in average AUM, posting a growth of 7.4%, or Rs 111.66 billion, to Rs 1.62 trillion. ICICI Prudential Mutual Fund maintained the second position at Rs 1.49 trillion, up 8.6%, or Rs 117.96 billion, though it was the top performer in terms of absolute rise in assets. Reliance Mutual Fund ranked third at Rs 1.37 trillion as its average assets rose Rs 110.55 billion, or 8.8%.

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