mutual funds aum jan 2019In the otherwise depressing mutual fund flows picture, Systematic Investment Plans (SIP) are the lone fighter. In January, SIP inflows touched an all-time high of Rs 8,064 crore as the retail investor keeps on investing with a ‘never-say-die’ attitude.

Inflows into equity mutual funds, including popular equity-linked savings schemes (ELSS), have fallen to their lowest level in 24 months to Rs 6,158 crore in January, a drop of 6.8% over December 2018. The industry is attributing the decline to domestic and overseas cues as well as mutual fund sales incentive changes. Clearly, redemptions are hitting funds amid tighter rules on commissions in mutual funds by the SEBI.

The SIP story, however, is very different. Used by a large number of retail investors, SIP amounts are automatically debited from investor bank account and credited to mutual fund account. With more retail investors opting for the SIP route (over 2.5 crore total SIP account), the amount of contribution from SIPs has grown every month, sip by sip. At Rs 8,000 crore, the SIP contribution (over 80% into equity funds) is helping the mutual fund industry counter-balance the selling done by other domestic institutions or foreign participants.

Commenting on the January 2019 mutual fund monthly data, N S Venkatesh, CEO, AMFI said: “Despite acute market volatility owing to credit events and global uncertainty, retail investors continue to repose their faith in the India growth story. This is quite evident from the SIP flows and folio numbers, which continue to rise sequentially. On the Debt AUMs, with RBI easing the rates, we expect to see flows rise in the coming weeks.”

Take a look at the monthly SIP contribution over the last 3 years.

Month SIP Contribution (Rs Crore)
FY 2018-19 FY 2017-18 FY 2016-17
March 7,119 4,335
February 6,425 4,050
January 8,064 6,644 4,095
December 8,022 6,222 3,973
November 7,985 5,893 3,884
October 7,985 5,621 3,434
September 7,727 5,516 3,698
August 7,658 5,206 3,497
July 7,554 4,947 3,334
Jun 7,554 4,744 3,310
May 7,304 4,584 3,189
April 6,690 4,269 3,122

From assets under management, the domestic mutual fund industry started the New Year on a positive note. Its assets under management (AUM) increased 2.2%, to Rs 23.37 lakh crore.

Though equity funds recorded inflows, unfortunately equity funds’ AUM declined 1.6%, to Rs 8.30 lakh crore owing to mark-to-market (MTM) losses. Nifty 50 and Nifty 500, representing the underlying equity assets, fell 0.3% and 1.8%, respectively, as per CRISIL.

Balanced funds saw outflows for the first time in 56 months. After attracting inflows for 55 consecutive months, balanced funds witnessed outflows of Rs 952 crore. Net outflows clubbed with MTM losses resulted in the category’s assets eroding by 2.1%, to Rs 1.76 lakh crore.

Tale a look at outflows as per different MF categories

MF flows January 2019

Debt funds (income funds in AMFI parlance) witnessed inflows after eight months. Despite persistent concerns, debt funds (excluding liquid and gilt funds) broke the eight-month-long spell of outflows, logging inflows of Rs 2,080 crore in January. The money inflow could be moving in the short-term debt fund categories as corporates and banks look at avenues to park their money after having withdrawn the money in the previous month to meet advance tax requirements. Aided by inflows and MTM gains, the category’s assets rose 0.8%, to Rs 6.97 lakh crore in the month.

Gilt funds weighed down by outflows. Gilt funds witnessed outflows after having seen inflows for the previous two consecutive months. Outflows led the category’s AUM to slip by 1.0%. As per CRISIL, the yield of the 10-year benchmark 7.17% 2028 paper ended at 7.48% on January 31, 2019, compared with 7.37% on December 31, 2018, owing to concerns over the domestic fiscal situation.

Liquid funds saw cyclical inflows. Liquid funds saw inflows in January following outflows of Rs 1.49 lakh crore in December. Liquid funds typically see outflows in the quarter-end as banks and corporates withdraw money to pay advance taxes and plough it back after the quarter-end. Led by inflows, liquid funds’ assets grew 14.1%, to Rs 5.09 lakh crore in the month.

Gold ETFs’ assets rose despite outflows. Gold exchange-traded funds’ (ETFs) assets increased 3.5%, or by Rs 161 crore, to Rs 4,732 crore on despite outflows in January. Asset growth was led by MTM gains as underlying asset prices, represented by CRISIL Gold Index, rose 5.01% in the month.

Author
Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. He can be contacted on kumarsroy@rupeeiq.com