Mutual funds’ average assets touch record high in September quarter

The Indian mutual fund industry's average assets under management (AuM) continued to scale new highs. The total AuM (excluding fund of funds) increased 7.24 per cent, or by Rs714.53 bn, to a record new high of Rs10.59 trillion in the quarter ended September, according to the Association of Mutual Funds in India (AMFI).

Industry assets were primarily boosted by a surge in equity AUM and supported by gains in short duration debt funds. 

Equity assets surge to new highs on positive market trend
Equity funds boosted industry assets in the latest quarter with the category average AuM up 23.49 per cent, or by Rs553.81 bn, (highest rise since September 2010 when AMFI started declaring quarterly average AuM) to its fresh record high of Rs2.91 trillion.

Gain in equity assets was fuelled by positive market sentiments and robust inflows into the category.

The market as represented by the benchmark – CNX Nifty – gained 4.64 per cent on hopes of reforms by the newly elected government at the Centre.

The category reported inflows of Rs171.89 bn in the first two months of the quarter (as per latest inflow/outflow data provided by AMFI).

Shorter duration (maturity) funds gain for the fourth consecutive year
Shorter duration funds – which include money market funds, ultra-short term and short-term debt funds – reported a rise in assets (consolidated) for the fourth consecutive quarter as investors continued to prefer investing in these categories since they are less sensitive to interest rate uncertainty vis-à-vis longer duration funds.

Consolidated assets of the category rose 8.34 per cent, or by Rs368.73 bn, to Rs4.79 trillion.

On a standalone basis, short-term debt and money market funds rose to record highs of Rs863.02 bn and Rs2.86 trillion, respectively, in the September quarter. 

FMPs' assets down from record high on tax changes
Assets of fixed maturity plans (FMPs) slipped 4.85 per cent, or by Rs84.30 bn, from a record high of Rs1.74 trillion to Rs1.65 trillion.

The fall is an outcome of the change in taxation announced by the new government in the Union Budget. The government increased the long-term capital gains tax on debt-oriented mutual funds from 10 per cent to 20 per cent and changed the definition of 'long term' for debt mutual funds to 36 months from 12 months effective from the date of the presentation of the budget (July 10, 2014).

Longer maturity debt funds' assets fall for the fourth consecutive quarter
Flat trend in interest rates amidst lack of monetary easing by the RBI continues to weigh on longer maturity funds – long-term debt and gilt funds.

Consolidated AuM fell for the fourth consecutive quarter. Long-term debt and gilt funds' average AuM fell by Rs127.14 bn and Rs 2.29 bn to end the quarter at Rs658.16 bn and Rs56.84 bn respectively. 

Gold ETFs remain subdued
Gold exchange traded funds (ETFs) marked their fourth consecutive quarterly fall, down 6.65 per cent or by Rs5.49 bn to Rs76.98 bn. The underlying asset prices (represented by CRISIL Gold Index) have declined 5.05 per cent in the latest quarter.

The category's disappointing performance has resulted in consistent outflows since June 2013. Consolidated outflows between June 2013 and August 2014 (last available data) were Rs31.94 bn – over 40 per cent of the category's current AuM.

Direct plans constitute 33 per cent of total assets
The average AuM of direct plans rose 3.85 per cent, or by Rs130.73 bn, to Rs3.53 trillion. However, the share of direct plans decreased marginally to 33 per cent of the industry's AuM (excluding fund of funds) in the reported quarter vis-à-vis 34 per cent in the previous quarter.

Top asset holders turn out to be highest gainers
Mutual funds managing the lion's share of the industry - HDFC Fund, ICICI Prudential Mutual Fund and Reliance Mutual Fund - logged highest absolute gains in the September quarter.

• HDFC Mutual Fund maintained its top position both in terms of AuM and gain in assets. The fund registered highest absolute rise of Rs114.45 bn (or 8.80%) to Rs1.41 trillion.
• ICICI Prudential Mutual Fund maintained the second position at Rs1.28 trillion; it saw the second-highest absolute gain - up Rs96.08 bn or 8.14 per cent.
• Reliance Mutual Fund maintained third rank with the asset tally at Rs1.22 trillion and was the third highest absolute gainer with a rise of Rs91.54 bn (or 8.11 per cent) in its AuM.
• Birla Sun Life Mutual Fund become the new entrant in the trillion asset club, with latest quarter AuM of Rs1.03 trillion (up by Rs40.60 bn or 4.12 per cent).

The share of the top five and top 10 mutual funds' assets was 55 per cent and 78 per cent respectively (same as the previous quarter).

The bottom 10 fund houses continued to occupy less than 1 per cent of the average AUM.

Mutual fund quarterly average AUM trend

Note: Direct plan's AUM is a part of total AUM

Source: CRISIL Mutual Fund Database

Source:CRISIL Mutual Fund Database