The assets under management (AUM) of mutual funds (MFs) declined to ₹21.36 lakh crore in March from ₹22.20 lakh crore in the previous month even as the overall AUM registered a rise of 21.7% in the financial year 2017-18, according to the Association of Mutual Funds in India (AMFI).
The month-on-month decline “mostly reflects a quarter-end phenomenon wherein companies tend to redeem investments in liquid funds for advance tax payments,” rating ICRA said on the decline. Data shows that in the last 21 quarter-end months, AUM had declined in 20 instances, according to a statement from the rating agency.
Further, the quarterly average assets under Management (QAAUM) at the end of the fourth quarter of FY18 (Q4FY18) was ₹23.05 lakh crore, up 26% from ₹18.30 lakh crore at the end of Q4FY17.
Benign capital markets
The asset growth was driven by benign capital markets for most part of fiscal FY18 besides investor awareness campaigns and strong retail participation, especially from B15 (beyond top 15 cities) investors, ICRA said.
The AUM under equity (including Equity Linked Savings Schemes or ELSS), balanced and other ETFs for March came in at ₹9.95 lakh crore against ₹10.21 lakh crore in February. This is 47.9% higher from ₹6.73 lakh crore in March 2017.
Incidentally, the last month of the financial year witnessed total net outflow of ₹50,752 crore compared with total net inflow of ₹12,092 crore in February even as balanced funds continued to attract investors amid market volatility.
The balanced funds category witnessed the highest inflow of ₹6,754 crore during the month following net inflow of ₹5,026 crore in February.
Meanwhile, maximum outflow was witnessed in the liquid/money market category at ₹54,979 crore. The income category witnessed net outflow of ₹13,719 crore.
In March, equity funds (including equity-linked saving scheme) witnessed net inflow of ₹6,657 crore down from ₹16,268 crore in February.
According to ICRA, the fall could be due to volatile equity markets and profit booking by investors to avoid paying long-term capital gains tax before the new tax rules came into effect from April 1, 2018.
According to data from the Securities and Exchange Board of India (SEBI), the total folio count at the end of March stood at 7.13 crore, 2.1% higher compared to February. In FY18, the industry added 1.27 crore folios in the equity category (including ELSS).
Published - April 12, 2018 10:34 pm IST
