Average AUM of income funds rises 42% to Rs 60,000 crore in December: Crisil

MUMBAI: An easier interest rate scenario led to substantial gains in income funds last year, with the average assets under management ( AUM) swelling by over 42 per cent to about Rs 60,000 crore in December 2015, from Rs 42,300 crore a year ago, a report by Crisil said.

The Reserve Bank of India slashed the repo rate by 125 basis points to 6.75 per cent over 2015 in a bid to ease inflationary pressures and boost the economy.

"The easing monetary situation provided a fillip to income funds, especially early movers, which invested in longer tenure debt instruments," the report said.

However, it noted that towards the last quarter of 2015, the RBI toughened its monetary stance, awaiting clearer signs of a drop in inflation, causing yields to harden.

The 10-year benchmark closed the year at 7.76 per cent, up 22 basis points from 7.54 per cent at September-end, the report said.

While the rise in yields affected the performance of income funds, the duration management helped top-ranked funds outperform the category, it added.

Even as yields reversed trends, the top-ranked funds stayed afloat as they lowered their average maturity, it added.