Buoyed by the sharp rise in the capital market, the mutual fund industry has managed to reverse investors’ interest in equity funds by registering an inflow of Rs 700 crore in November against an outflow of Rs 3,500 crore in October.
The inflow in November was the highest in the last five months.
Total assets under management in equity funds increased marginally by 1 per cent to Rs 1.75 lakh crore (Rs 17 lakh crore), marking the third monthly rise in a row.
“Notwithstanding the volatility, I expect the market to sustain the current rally with occasional profit-booking,” he said.
The overall assets under the mutual fund industry management moved up by Rs 56,000 crore or seven per cent to Rs 8.90 lakh crore. This was largely due to large inflow into liquid and money market schemes.
Liquid funds saw 30 per cent increase in net inflow of Rs 51,400 crore as liquidity in the system improved. Liquidity in the banking system also improved in November due to gilt purchases via open market operations and an additional 11-day repo auction by the RBI.
GOLD ETF DOWN Government spending also helped ease liquidity in the system. Over the last two months, liquid funds saw record inflows of Rs 1.19 lakh crore on a consolidated basis.
Gold exchange traded fund registered an outflow for the sixth consecutive month in November. The Government efforts to suppress gold demand and fall in gold prices have led to decline in AUM of gold funds by six per cent to Rs 9,300 crore. The category’s AUM saw an outflow of Rs 130 crore and mark-to-market losses.
The large outflow of Rs 3,300 crore from the income funds including long-, short-term debt funds, fixed maturity plans and ultra short-term debt funds was the biggest drag on the industry. The asset under this fund fell 0.7 per cent to Rs 4.31 lakh crore. Investors preferred to exit long-term debt funds as they underperformed most markets.