Asset base of equity funds sees biggest fall in 35 months

Despite a sharp fall in equity markets, assets under management (AUM) of mutual funds fell by just ₹1,121 core at ₹12.74 lakh crore in January.

According to CRISIL study, based on data provided by the Association of Mutual Funds in India, equity funds were battered, and their AUM fell 5.25 per cent to ₹3.84 lakh crore, marking the biggest percentage decline in the last 35 months.

Investors repose faith In absolute terms, AUM shrank ₹21,312 crore, or the most in seven years, as mark-to-market losses surged. In January, Nifty 50 declined nearly 5 per cent. Despite the turbulence in the market, investors seem to keep the faith in Indian equities, as they pumped in ₹2,914 crore in January. “This, however, is the lowest absolute growth in 20 months,” said Crisil study.

Since May 2014, equity funds have been seeing net inflows as investors bet on a rebound in the India economy.

What saved the blushes were income, liquid funds and exchange-traded funds (ETFs), including gold-related ones.

Assets of balanced funds fell 2.5 per cent to ₹41,121 crore primarily led by losses in equity assets. However, investors don’t seem perturbed as the category still managed to attract ₹880 crore, marking the 20th consecutive month of net inflows. Represented by the CRISIL Balanced Fund Index, the category lost nearly 3 per cent in value in January.

Pressure on global funds Redemption pressures persisted for global funds — or fund of funds that invest abroad — as concerns over global recovery continued to spook investors. The category saw its 20th straight month of outflows in January. Its AUM, which had touched an all-time high of ₹3,226 crore in June 2014, has shrunk 42 per cent since then to ₹1,877 crore.

Asset base of income funds, equity exchange traded funds (ETFs) and gold ETFs rose in January by 3 per cent, 6.4 per cent and 6.9 per cent, respectively.