The mutual fund (MF) industry recorded net inflows to the tune of 1.54 lakh crore in April. That has every MF investor over the moon, especially as the last year’s period, along with that of the new year too, has been very hard (net outflows of Rs 28,297 crore happened in 2008-09 period).
The value of net inflow/outflow is different from the AAUM. While the former is the aggregate figure over a period of time, the latter is a daily average of the assets for a given month.
But look beyond the aggregates, and the numbers have more sobering news to reveal. The fact of the matter is that, while the majority of the funds recorded net outflows, just a few managed to show positive inflows. In fact, only 3 out of 10 of AMFI's MF categories recorded net inflows, with Income and Liquid schemes recording the maximum amount of net inflows of Rs 1.03 lakh crore and Rs 0.51 lakh crore respectively. This lopsided contribution helped the total figure to move into positive terrain.
The third category to show net inflows was the equity-linked saving schemes (ELSS). After net inflows of Rs 547 crore in March, Rs 90 crore was the figure recorded in April. Even in March, the net inflows in this category were lower this year when compared to March 2008 when Rs 2,071 crore of net inflows were recorded.
There were four new fund offers (NFOs) in April, one was an equity scheme, while three were income schemes, and they managed to collect a sum of Rs 119 crore.
The month of April figures have a lot to do with what happened in March. The month of March saw MF industry's net outflow figures at Rs 98,697 crore. The fall was the worst-ever in the MF industry's history. The AAUM in March also fell by 1.54 per cent. But that was not a poor performance as it happens every year and is part of the industry’s business cycle. What had happened in March was that corporates and other institutional investors withdrew funds for filing advanced income tax returns. The same funds came back in April. However, unlike April 2008, this time inflows under income and liquid schemes were much higher. The probable reason for that could either be the extreme volatility in equity funds or even on expectations of a rate cut in the Reserve Bank of India’s annual policy.
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With money coming back into the income and liquid schemes, equity schemes were left high and dry. And even though markets rallied to touch a 7-month high, the craving in investors for equity funds was not seen. Net outflows were recorded in equity schemes (other than ELSS) of Rs 196 crore for the month.
Balanced, Gilts, ETFs and Fund-of-funds (FOFs) were the other categories from which money flowed out.