Mutual funds’ AUM growth in July alone beats total for entire 2005

In 2005, mutual funds (MFs) saw their assets growing by Rs 50,000 crore to Rs 199,000 crore. However, in less than two years...

In 2005, mutual funds (MFs) saw their assets growing by Rs 50,000 crore to Rs 199,000 crore. However, in less than two years, assets under management (AUM) of Indian mutual funds vaulted by a record-breaking Rs 86,000 crore in just one month — July 2007 — taking the corpus to Rs 486,650 crore. This indicates a phenomenal growth of 21.56 per cent in assets during the month.

The rise in inflows in July is significant as the total assets under management of MFs were only Rs 79,464 crore in March 2003. “Growth of this magnitude in a single month has rarely been seen in the Indian mutual fund industry,” said Crisil fund services and fixed income research head Krishnan Sitaraman. A growing number of retail investors are now relying on mutual funds to invest in stocks. “The large number of new fund offerings, the sharp rally in the equity markets and liquid fund inflows drove these levels of AUM growth. All of Crisil’s fund indices ended positive for the fourth consecutive month. Returns were higher than in the previous month, mainly due to the robust market performance,” Sitaraman said.

According to figures released by the Association of Mutual Funds of India (Amfi), Reliance Mutual Fund continued to top the AUM chart with AUM in excess of Rs 66,420 crore, while ICICI Prudential Mutual Fund took the second spot with AUM of Rs 48,689 crore. UTI Mutual Fund was third with AUM of Rs 42,548 crore. In the secondary market, MFs were net sellers to the extent of Rs 900 crore in July, after being net buyers of Rs 700 crore in June.

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The inflows are expected to rise further. In July, the Cabinet Committee on Economic Affairs allowed Navaratnas and Miniratnas in the public sector to invest up to 30 per cent of their surplus funds in public sector equity mutual funds. As a result, after a nine-year gap, these organisations can again invest in equity mutual funds. The move could result in investment flows of Rs 60,000 crore into the sector from cash-rich public sector undertakings.

While liquid/ money market schemes attracted Rs 63,381 crore net inflow for the year to date, income funds saw a jump in inflows to Rs 61,410 crore as on date against an inflow of Rs 1,966 crore in the same period of last year.

Growth funds and gilt funds have continued to show a decline in growth in inflows in the current year.

2007 INFLOWS

JULY: Rs 86,000 cr

JUNE: Rs 13,199 cr*

MAY: Rs 64,478 cr

APRIL: Rs 24,454 cr

MARCH:Rs 26,557 cr*

FEB: Rs 14,078 cr

JAN: Rs 15,557 cr

* indicates outflow

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