Mutual fund AUM hits record high on strong retail inflows

Retail investors continued with investments despite weakness in markets over the last year: Experts

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HDFC Mutual fund continued to occupy the top spot in terms of AAUM (including fund of funds- domestic) at the end of the quarter followed by ICICI Prudential MF and Reliance MF (Image Source: Reuters)

The weakness in the equity markets notwithstanding, the mutual fund industry continued to gain on assets under management, hitting a record average AUM of Rs 13,58,559 crore for the quarter ended March 2016. HDFC Mutual fund continued to occupy the top spot in terms of AAUM (including fund of funds- domestic) at the end of the quarter followed by ICICI Prudential MF and Reliance MF.

Over the last one year, even as the Sensex at Bombay Stock Exchange lost 9.4 per cent, data released by Association of Mutual Funds of India shows that the average AUM of MF industry rose by Rs 1,63,940 crore or 13.7 per cent primarily driven by record net inflows into equity mutual funds and strong inflows into balanced, income and liquid schemes. Industry experts say that the retail investors have been the difference this year as they continued with their mutual fund investments despite weakness in markets over the last year.

During the 11-month period between April 2015 and February 2016, the net inflows into equity schemes of all 42 mutual funds rose by a record of Rs 70,817 crore. The net inflows into balanced funds and equity linked savings schemes too amounted to Rs 19,665 crore and Rs 4,577 crore respectively. Thus the aggregate into the three stood at Rs 95,059 crore. The inflows into liquid schemes and income funds during the same period amounted to Rs 75,714 crore and Rs 28,786 crore respectively.

The net inflow into equity mutual funds hit a record high even as the foreign portfolio investors remained net sellers into Indian equities in 2015-16 — first time since 2008-09 when the Lehman crisis unfolded.

The FPIs sold Indian equities worth a net of Rs 14,171 crore during the year as concerns grew over slowdown in China, Indian tax authorities spooking the FPIs by issuing tax notices on capital gains and as apprehensions grew over an imminent rate hike by the US Federal Reserve.

Earlier in March, UK Sinha, chairman, Securities and Exchange Board of India had said that mutual funds have emerged as a strong counterbalance to FPIs. “Mutual Funds are emerging as a new and a very strong counterbalance for FPIs in the Indian markets,” Sinha had said. He had further added that participation from the MF industry has increased especially from B-15 (beyond top-15 cities).

Even as the MF industry gained significantly, the gains varied for different players. Though the pecking order for top three fund houses remained the same, the gap between the leader and the second largest fund house narrowed considerably.

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While ICICI Prudential saw its AUM grow by 27,317 crore or 18.4 per cent during the year to Rs 1,75,964 crore, HDFC MF’s AUM grew by Rs 14,115 crore or 8.7 per cent during the same period to Rs 1,76,084 crore. Reliance MF, the third largest fund house saw its AUM rise by Rs 21,130 crore or 15.3 per cent to Rs 1,59,369 crore.