Mutual fund asset increases by 2%

Our Bureau Mumbai | Updated on March 10, 2011 Published on March 10, 2011

The average assets under management of the mutual fund industry increased by 2.3 per cent to Rs 7.07 lakh crore in February on the back of higher inflows into the income and liquid schemes.

Net inflows of Rs 25,757 crore during the month was, however, lower compared with January numbers (Rs 84,452 crore), according to Association of Mutual Funds in India data.

The first month of each quarter always sees good inflows into the money market schemes, say analysts.

“The increase in AUM, for the month of February has been because of higher participation from retail investors and the banks. Since markets have corrected in the past few months, retail investors are investing more in equity schemes. Also, banks have been participating more in the liquid and money market funds,” said Mr Gopal Agrawal, Deputy CIO and Head-Equity, Mirae Asset Global Investments (India).

In terms of average assets under management (AUM), income schemes dominate the list with around Rs 3.2 lakh crore, higher by 4.6 per cent over last month. Equity schemes have the second highest AUM of about Rs 1.59 lakh crore (Rs 1.65 lakh crore in January).

However, the highest increase of 22.13 per cent was seen in the case of exchange traded funds (ETFs), other than gold ETFs. No new ETF schemes (apart from gold) were introduced in February. The growth in this category shows the increasing investor interest, especially in the current uncertain market conditions, say fund managers.

The average AUM under ETFs (other than gold) was Rs 2,235 crore. Gold ETFs ended February with an average AUM of Rs 3,744 crore. The second highest increase has been in case of liquid and money market funds, which have grown by 5.59 per cent.

Equity schemes attracted net inflows of Rs 2,495 crore in February (Rs 881 crore in January). With the markets having corrected heavily in the last three-four months, equity funds have once again gained favour with retail investors.

“Generally, retail participation has been higher in the last two-three months. Investors who had been on the sidelines have started coming back into the market and investing,” said Mr Hemant Rastogi, CEO, Wiseinvest Advisors.

“It's been a decent trend for us in February, definitely better than January. On our counters, we have seen an increase of about 25-30 per cent in retail participation,” said Mr K. Venkitesh, National Head-Distribution, Geojit BNP Paribas Financial Services.

Inflows have been the highest for income funds, at Rs 13,708 crore, followed by liquid funds at Rs 8,770 crore and equity schemes at Rs 2,495 crore.

Only two categories of funds have seen outflows in February – gilt funds (Rs 271 crore) and fund of funds investing overseas (Rs 14 crore).

Published on March 10, 2011
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