The month of March, i.e. the last one of the 2018-19 financial year, was a mixed one for the mutual fund industry. On one hand, the fabled ‘SIP’ juggernaut witnessed a marginal drop in collections at Rs 8,055 crore and four fund categories including liquid, arbitrage, and balanced saw outflows. On the other hand, equity funds and ELSS saw net inflows jumping over 100% compared to February. For the entire financial year as a whole, the MF industry didn’t have too many positives given that net inflows fell by nearly 60% in 2018-19 compared to 2017-18. Let’s have a closer look.
This category, which has the second largest amount of investor assets at Rs 7.18 lakh crore, saw a swift turnaround in March. In February, income funds saw a combined outflow of over Rs 4,200 crore, but March saw more than Rs 13,800 crore net inflows. For the full year, however, income funds saw a whopping Rs 1.2 lakh crore outflows compared to less than Rs 6,000 crore in FY17-18. There are about 1,252 schemes in the income category, with a huge portion of close-ended ones.
This category is home to the biggest amount of investor assets at Rs 7.44 lakh crore. The month of March saw Rs 9,014 crore worth net inflow compared to Rs 3,948 crore in February. For the full year, equity funds as a category saw Rs 99,087 crore, down 27% compared to FY17-18. There are 460 schemes in this category, with 104 being close-ended.
The SIP route netted Rs 8,055 crore in March 2019, marginally lower than the Rs 8,094 crore in February.
Commenting on March 2019 monthly mutual fund data, N. S. Venkatesh, CEO, AMFI said: “Mutual Fund Industry, in one of the most difficult and uncertain year, marked with acute market volatility, credit events, and border tensions, has done exceedingly well, with overall industry growing by 11% and retail by 14%. With Interest Rates easing and impact of credit events almost normalised, and macro-economic indicators showing a healthy uptrend, the MF industry is poised to grow at a robust 17-18% during 2019-20.”
This is not a new MF category, but inflow data for this is being displayed only recently. Arbitrage funds, which are more tax efficient than liquid funds despite having same return profile, saw net outflows of nearly Rs 4,000 crore in March 2019. This was almost eight times the outflows seen in February 2019. Arbitrage funds account for Rs 52,000 crore investors assets or roughly 2% of total MF industry money. There are about 25 arbitrage funds at present. For the full year, arbitrage funds saw net outflows of Rs 3,888 crore compared to net inflows of over Rs 20,500 crore in FY17-18.
This was a popular category even a few months ago. However, balanced funds as a category have lost their sheen of late. It clocked net outflows of over Rs 3,100 crore in March 2019, almost triple of the February 2019 number. Balanced funds account for Rs 1.8 lakh crore of investor money, or about 8% of MF industry assets. For FY18-19 year, balanced funds have managed net inflows of less than Rs 7,000 crore compared to nearly Rs 90,000 crore in FY17-18. There is a total of 27 balanced schemes in the industry today.
Liquid/money market funds
This is a big asset puller for the MF industry. Unfortunately, the quarter and financial year end months see significant pull-out of money from both institutions and smaller investors. Liquid/money market funds, which number about 65, saw outflows of Rs 51,343 crore in March compared to Rs 24,509 crore in February. For the FY18-19 year, however, liquid/money market funds saw net inflows of Rs 76,093 crore compared to marginal outflows in FY17-18. Liquid/money market funds form 18% of MF industry assets with Rs 4.36 lakh crore investor money in them.
ELSS or tax saving funds
This is a popular category for its tax-saving character. ELSS category saw a reasonable Rs 2,742 crore net inflows in March, taking its FY18-19 tally to Rs 12,771 crore. The March monthly number is an over 100% jump from Rs 1,174 crore raked in February. In FY17-18 year, ELSS category saw net inflows of Rs 14,316 crore. There are 43 ELSS funds in the industry, with 26 of them being close-ended. ELSS category with Rs 96,000 crore investor money forms 4% of MF industry assets.
We are not covering Gilt, Gold ETFs, other ETFs and fund of funds because they are too small a category.