Equity mutual fund assets at new highs on market rally

CHENNAI: With markets rising to record highs on a consistent basis and inflows into schemes remaining steady, the assets under management (AUM) of equity mutual funds (MFs) surged to a new peak of about Rs 2.6 lakh crore in August, up 6% (Rs 15,112 crore) over the previous month.

Net inflows (higher purchases in schemes by investors than sales) into equity MF schemes (including equity-linked savings schemes) stood at Rs 5,364 crore during the month, data with the Association of Mutual Funds in India ( AMFI) showed.

AUM of the mutual fund (MF) industry increased by Rs 6372 crore to about Rs 10.1 lakh crore in August on the back of inflows into equity schemes. The underlying equity assets represented by the BSE sensex increased 3.4%, while the CNX Nifty index rose 3.8% in August and by about 28% since the start of 2014 on hopes of economic reforms by the new government.

Income funds showed outflows of Rs 12,696 crore, the highest since December 2008, resulting in a monthly fall of 2.2% or Rs 10,537 crore in their assets. Their AUM stood at around Rs 4.6 lakh crore in August, AMFI data showed. This was largely due to the poor show by close-ended income funds, which comprise mostly fixed maturity plans (FMPs). Closed-ended income funds collected only Rs 1,941 crore in August.

The category has been hit by the change in taxation announced by the new government in the Budget. The government increased the long-term capital gains tax on debt-oriented MFs from 10% to 20%. It also changed the definition of 'long-term' for these funds to 36 months from 12 months effective from the date of the presentation of the Budget (July 10).

Liquid funds' AUM advanced marginally to around Rs 2.4 lakh crore. Inflows into the category are cyclical in nature as companies, banks and financial institutions plough the surplus money back into the funds after withdrawing it at the end of the quarter for paying advance tax.

Gilt funds, which bucked the seven-month outflow trend by registering inflows of Rs 110 crore in July, recorded outflows of Rs 209 crore in August. The category's assets dipped 3.4% to Rs 5,450 crore, AMFI data showed. Gold ETFs (exchange-traded funds) witnessed outflows of Rs 112 crore in July, the second lowest in the past 14 months. Their assets dropped 1.4% to Rs 7,661 crore.