Published on 14/03/2021 12:46:17 PM | Source: IANS

Mark-to-market gains push mutual fund AUM higher: Crisil

Posted in Expert Views| #Mutual Fund #Expert Views #CRISIL

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Inflows in open-ended debt along with hybrid categories and mark-to-market gains in the domestic equity market pushed India's mutual fund industry asset under management higher, Crisil Research said in a report.

However, outflows from equity funds capped gains.

Cumulatively, the industry's fund flows remained negative at Rs 1,844 crore, the report said.

"Bouncing back from the decline witnessed in January, assets under management (AUM) of the domestic mutual fund industry breached the Rs 31.5 lakh crore mark for the first time, settling 3.7 per cent higher at Rs 31.6 lakh crore at end-February."

"The previous high recorded was at end-2020, when the asset base had settled at Rs 31.02 lakh crore."

Accordingly, dynamic asset allocation schemes witnessed the highest net inflows for the category since April 2019 at Rs 2,006 crore in February, with investors attracted by the flexibility in asset allocation on offer.

"Interest in arbitrage schemes also remained firm, with net inflows at Rs 5,033 crore as market participants looked to take advantage of the volatility in the underlying equity market."

"Aided by the inflows, the hybrid category recorded net inflows of Rs 4,703 crore, higher than January's net inflows of Rs 2,142 crore."

The other hybrid categories such as aggressive hybrid, equity savings, and multi-asset allocation categories, however recorded persistent outflows in February, the report said.

They stood cumulatively lower at Rs 2,481 crore compared with the previous month's Rs 3,823 crore.

"The open-ended debt fund category recorded the lowest net inflows since the Association of Mutual Funds in India (AMFI) changed its format of dissemination in April 2019, at Rs 1,735 crore."

Besides, the report said that fund flows trends within the open-ended equity category showed no signs of abating, with net outflows in February at Rs 10,468 crore, higher than January's Rs 9,253 crore figure.

"Investors looked to book profits as the underlying domestic equity benchmarks hit record highs during the month - the S&P BSE Sensex and Nifty 50 advanced 6.1 per cent and 6.6 per cent on month, respectively."

According to the report, the introduction, recategorisation of flexi- and multi-cap funds had a major impact on flows in the category for the second consecutive month.

"The flexi-cap category recorded the highest net outflows within the category at Rs 10,431 crore, while multi-cap funds saw the highest net inflows of Rs 4,078 crore."

"As per AMFI disclosure, during February, nine multi-cap funds were recategorised as flexi-cap funds. As such, the funds mobilised and redemption figures of these funds were shown under flexi caps, resulting in negative funds mobilised and redemption figures under multi-cap funds."

In addition, the report cited that investors continued to pour money into equities via the systematic investment plan; however, contributions in February were slightly low at Rs 7,528 crore compared with January's Rs 8,023 crore figure.

"The overall open-ended equity asset base settled at a fresh record high of Rs 9.63 lakh crore on-month."