Asset base: Equity funds hold up; gold flows recede

Our Bureau Mumbai | Updated on November 15, 2017 Published on April 10, 2012


Systematic investments continue

Data on assets under management (AUM) from the AMFI showed that equity fund assets rose in the quarter ended March, while inflows into gold funds flagged.

The January to March quarter this fiscal saw the equity fund AUMs increase by 12 per cent, as investors continued to put money in SIPs. “The last time when the markets saw a decline, a lot of SIPs were stopped. However, this time around investors have stuck around and are holding on to their investments which is a good sign,” said Mr Renjith.

Fund houses hopeful

In contrast, after seeing good inflows in the first three quarters of the fiscal, Gold ETFs saw waning interest in the quarter ended March. Analysts say that inflows into these funds decreased substantially as gold prices have remained static and in a range in this period. But fund houses hope the inflows may revive in April.

“Last year during Askhay Trithiya, gold ETFs saw the highest amount of trading. This year also we expect to see similar interest among investors,” said the official.

Woes & Outflows

End-of-quarter woes, however, led to the mutual fund industry losing 13 per cent of its assets under management (AUM) in March. Compared to February end, the AUM of the industry fell from Rs 6.75 lakh crore to Rs 5.87 lakh crore.

Fund analysts attribute the outflow of funds to the advance tax payments made by corporations and the removal of funds by the banks for meeting capital adequacy requirements at the end of every quarter.

“The redemptions were seen mainly in the debt fund categories, primarily the liquid funds. Typically, institutions and banks tend to withdraw money for the purpose of advance tax payments. There is nothing unusual about the drop in the AUM at the end of the quarter,” said Mr Renjith R G, National Head — Distribution, Geojit BNP Paribas Financial Services. Liquid and money market funds lost nearly half their AUM on a monthly basis in the month of March 2012.

FY12 was a difficult year for the mutual fund industry which saw heavy volatility in the AUM numbers. In April last year, the RBI issued a guideline asking banks to limit their exposure to the mutual funds to ten per cent of their networth by December 2011. Owing to this regulation, the December AUM fell by ten per cent.


Published on April 10, 2012
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