Equity funds continue to see outflow; SIPs too ‘losing
interest’
The mutual fund industry has for the second month in a row
seen an increase in its assets under management (AUM). At the end of August,
AUM — the total investment corpus available with the mutual fund industry —
stood at Rs 7.52 lakh crore, up three per cent. As at end July, the industry
AUM was Rs 7.3 lakh crore.
Between June and August this year, the industry AUM has
grown by about 10 per cent from Rs 6.88 lakh crore (June 2012) to Rs 7.52 lakh
crore. Fund house officials said the industry AUM is on the rise due to the
increase in liquidity in the system. This increase in liquidity finds its way
into the mutual fund liquid schemes as banks and corporations park their excess
money in theses schemes.
Liquid and money-market schemes see regular inflows at the
beginning of a quarter and outflows (for advance tax payment) at the end of the
quarter. The three per cent rise in August is a reflection of the same, they
said.
2nd half unpredictable
“Monetary policy is supporting liquidity. However, it is
difficult to foresee what the second-half will bring as typically it is a busy
season. Usually, liquidity during this season is tight,” said Ramanathan K,
Chief Investment Officer, ING Investment Management (India).
The second half of a financial year witnesses liquidity
constraints as the borrowing and credit requirements increase. Therefore,
mutual funds see lower investments from institutions. But lowered income fund
participation still brings in more business for the industry which is starved
for retail participation.
Retail participation has always been low in the industry.
However, in the last couple of years, it has gone down further as equity market
performances have weakened. Equity schemes continue to see redemptions along
with a decline in value in line with the market performance. Even incremental
SIP flows, which were robust till about a few months ago, have become weak,
said analysts.
According to industry officials, the industry has about 4.6
crore folios of which less than two crore are unique investors. This includes
both retail and institutional participants.
In the last one year period (August 2011-2012), the equity
AUM has fallen by 1.5 per cent while that of the income schemes has increased by
9.8 per cent. During the same period, liquid and money market schemes have seen
a rise of about 14 per cent.
Source: http://www.thehindubusinessline.com/markets/stock-markets/article3885670.ece
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