The Indian mutual fund industry’s assets increased by 24% to Rs 7.2 trillion, primarily driven by inflows in income and liquid funds in July, as per the data released by the Association of Mutual Funds in India.
Income funds registered 34% increase in its assets to Rs 3.8 trillion, constituting 53% of industry’s assets, while liquid or money market funds registered 25% rise in assets to 1.4 trillion rupees accounting for 19% of industry’s assets.
In contrast, the industry registered 12% decline in total assets in June, primarily led by redemptions in liquid and income funds.
Institutional investors, mainly corporate and banks that form large chunk of liquid funds’ assets invested in income funds mainly in ultra-short bond funds in July to achieve better yields. The move to switch from liquid funds to ultra-short bond funds was mainly due to decline in returns in liquid funds as the market regulator, the Securities and Exchange Board of India, restricted liquid funds in investing in securities more than 91 days maturity.
The diversified equity funds registered 10% growth in assets to 1.6 trillion rupees, constituting 22% industry’s assets under management, driven by upbeat equity markets. The equity linked tax saving schemes’ assets grew 9% to 198 billion rupees during the month.
Government securities dedicated funds registered net redemption during the month, resulting in 19% dip in their assets. These funds’ returns were hampered, owing to rise in bond yields led by higher government borrowings and rising fiscal deficit.
The top-10 funds by assets under management (AUM) constituted 78% of the industry’s assets under management. Reliance Mutual Fund retained its top position with Rs 1.08 trillion in assets, while HDFC Mutual Fund and ICICI Prudential Mutual Fund had assets worth Rs 834 billion and Rs 733 billion, respectively.
In terms of growth in assets among top-15 funds, Religare Mutual Fund, which stood at the 15th position in terms of AUM, registered 22% growth in its assets. The fund house had Rs 122 billion in AUM. LIC Mutual Fund and Franklin Templeton Mutual Fund each registered 8% growth in assets to Rs 350 billion and Rs 276 billion, respectively.
There are currently 36 asset management companies in the country.