MF assets reach a new high at Rs 7.2 trillion

The mutual fund industry's assets under management (AUM) reached a new peak at the end of July by crossing the Rs 7-trillion mark for the first time ever to reach Rs 7.2 trillion. This translated into a healthy growth of 24% over the previous month. Both debt and equity categories saw fresh inflows on the back of positive returns across categories except in the gilt segment.

"Income and liquid funds saw strong inflows in July, with banks again parking money in mutual funds after withdrawals in June end to meet quarter end capital adequacy-related requirements. The positive market momentum saw continued interest in equity funds," said Krishnan Sitaraman, director, Crisil FundServices.

Equity markets saw positive movement with the SandP CNX Nifty (^NSEI : 5245.9 +14) giving 8% returns in July aided by an upward movement in global market and better-than-expected corporate earnings. Rising FII inflows helped provide good liquidity to the equity markets as they bought secondary market equities worth Rs 116 billion in July compared to Rs 32 billion in June.The rally during the month was also broad-based with mid- and small-cap indices gaining 10% and 8%, respectively. Mutual funds saw the second highest net inflows of 2009 in July at Rs 1.2 trillion (the highest being in April 2009 at

Rs 1.5 trillion).

The year so far has seen five months of net inflows and only two months of net outflows, i.e., in March and June, primarily on account of advance tax and quarter end capital adequacy-related balance sheet requirements of banks. A key feature in this trend is that the months following the quarter ending (March and June) have seen large inflows, which indicate that outflows witnessed were of a very short-term nature. Equity funds also saw substantial net inflows of Rs 42 billion in July, almost half the net inflows in the category for year 2009 so far. For the fourth consecutive month gilt funds witnessed net outflows to the tune of Rs 11 billion.