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February 08, 2019

Monthly Update

Mutual fund AUM, January 2019

Mutual funds start 2019 on a positive note as month-end assetsrise 2% in January

 

The domestic mutual fund industry started the New Year on a positive note. Its assets under management (AUM) increased2.2%, or by Rs 512 billion, to Rs 23.37 trillion in January 2019 owing to inflows into liquid, debt and equity funds.

 

Investor interest in equity funds persisted

 

Equity funds recorded inflows to the tune of Rs 50.82 billion in January following inflows worth Rs 44.42 billion the month before.January marked the 34th consecutive month of inflows for the category. Despite inflows, equity funds’ AUM declined 1.6%, or byRs 139.07 billion, to Rs 8.30 trillion owing to mark-to-market (MTM) losses. Nifty 50 and Nifty 500, representing the underlyingequity assets, fell 0.3% and 1.8%, respectively.

 

Balanced funds saw outflows for the first time in 56 months

 

After attracting inflows for 55 consecutive months, balanced funds witnessed outflows of Rs 9.52 billion. Net outflows clubbedwith MTM losses resulted in the category’s assets eroding by 2.1%, or Rs 38.03 billion, to Rs 1.76 trillion.

 

Debt funds witnessed inflows after eight months

 

Despite persistent concerns, debt funds (excluding liquid and gilt funds) broke the eight-month-long spell of outflows, logginginflows of Rs 20.80 billion in January. The money inflow could be moving in the short-term debt fund categories as corporatesand banks look at avenues to park their money after having withdrawn the money in the previous month to meet advance taxrequirements. Aided by inflows and MTM gains, the category’s assets rose 0.8%, or by Rs 57.15 billion, to Rs 6.97 trillion in themonth.

 

Gilt funds weighed by outflows

 

Gilt funds witnessed outflows of Rs 0.89 billion after having seen inflows for the previous two consecutive months. Outflows ledthe category’s AUM to slip by 1.0% to Rs 80.59 billion in the month. Yield of the 10-year benchmark 7.17% 2028 paper ended at7.48% on January 31, 2019, compared with 7.37% on December 31, 2018, owing to concerns over the domestic fiscal situation.

 

Liquid funds saw cyclical inflows

 

Liquid funds saw inflows of Rs 586.37 billion in January following outflows of Rs 1.49 trillion in December. Liquid funds typicallysee outflows in the quarter-end as banks and corporates withdraw money to pay advance taxes and plough it back after thequarter-end. Led by inflows, liquid funds’ assets grew 14.1%, or by Rs 629.27 billion, to Rs 5.09 trillion in the month.

 

Gold ETFs’ assets rose despite outflows

 

Gold exchange-traded funds’ (ETFs) assets increased 3.5%, or by Rs 1.61 billion, to Rs 47.32 billion despite outflows of Rs 0.55billion in January. Asset growth was led by MTM gains as underlying asset prices, represented by CRISIL Gold Index, rose5.01% in the month.