January saw a sharp increase in the equity AUM of the mutual fund industry due to the equity market appreciation, said analysts. The assets under management (AUM) of the mutual fund industry surged about eight per cent to Rs 6.6 lakh crore from Rs 6.1 lakh crore.
“(Equity) Market appreciation was the main factor which contributed to the rise in the AUM. There have not been too many redemptions as investors have been holding on to their investments through the SIP route. This is a positive sign, given the turmoil and uncertainty in the market,” said Mr Gopal Agrawal, Chief Investment Officer and Head —Equity, Mirae Asset Global Investments (India).
The AUM of the equity funds rose around 11 per cent to Rs 1.56 lakh crore in January 2012 from Rs 1.4 lakh crore in December 2011. Benchmark indices also rose by around 11 per cent raising the valuation of the equity funds.
Equity funds suffered the most last calendar year due to the poor performance of the equity markets. Between January and December 2011, when the equity markets fell 24 per cent, the AUM under equity funds fell around 15 per cent. During the same period the total AUM of the industry fell 11.5 per cent.
Inflows
The fund category that saw the highest inflows was the liquid and money market schemes which increased by 22.5 per cent this month. This category often receives a bulk of the investments at the beginning of every quarter. This is because money that goes out of the system as advance tax payment at the end of the previous quarter finds its way back at the beginning of the next quarter, said analysts.
The AUM under Gold ETFs, which saw a 155.6 per cent increase last calendar year, rose five per cent on a month-on-month basis (from December 2011 to January 2012).
Analysts say that products such as only get in favour with the investors when the appreciation of the underlying asset is very fast.
“A lot of investors enter these schemes when the rate of appreciation is high and once it stagnates, they start withdrawing. But in these uncertain conditions due to loose monetary policy in the West, people should stay invested in real assets like commodities,” said Mr Agrawal.