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Overall mutual fund assets grow marginally; equity funds see slowdown in April

Strong inflows in income and debt schemes trigger rise in overall assets under management

Total assets under management (AUM) registered a marginal rise in April, even as net flows in equity funds fell to the lowest level since September 2016.

According to the latest data from the Association of Mutual Funds in India (AMFI), the overall AUM of the fund industry rose to ₹24.79 crore, up 4.17% compared to the previous month’s ₹23.8 lakh crore.

The rise in the overall AUM was primarily on account of strong inflows in income and debt schemes that saw net flows totalling ₹1.21 lakh crore during the month.

Equity schemes

Equity schemes, however, had a rather subdued month as flows fell to ₹4,608.74 crore. The net flows were further lower as such closed-ended funds registered net outflows of ₹379.26 crore.

Incidentally, the net flows of ₹4,229 crore in equity schemes is significantly lower than previous month’s ₹11,756 crore and also the lowest since September 2016 when the net flow in equity schemes was only ₹3,743 crore.

N.S. Venkatesh, CEO, AMFI, however, said that the April flows cannot be compared to the previous month, as the data for April had been reported in the new format prescribed by the Securities and Exchange Board of India (SEBI) with focus on the regrouped and reclassified schemes.

“Overall nervousness in the markets owing to credit events, rating downgrades and defaults, coupled with global trade imbalance, and uncertainty over outcome of general elections has led to investors getting into wait-and-watch mode,” Mr. Venkatesh said, explaining the net outflows and subdued response to fixed maturity plans and credit risk fund category.

Net outflows

The closed-ended income and debt oriented schemes saw net outflows of nearly ₹18,950 crore.

Meanwhile, retail AUM increased marginally by 2% to ₹10.90 lakh crore from ₹10.72 lakh crore in the previous month. Further, inflow through systematic investment plan (SIP) also rose 2% at ₹8,238 crore with the addition of 3.62 lakh folios.

“Steady growth in equity SIPs, continued net inflows into equity schemes, and overall AAUMs (average AUM) crossing ₹25 lakh crore driven by inflows into liquid funds in April 2019 are reflective of the overall retail and institutional investor confidence in the India growth story,” Mr. Venkatesh said.

Investor comeback

Interestingly, the AMFI chief believes that investors would return in a big way as corporate earnings improve further and once the general elections related uncertainty and global headwinds recede over the next few months.

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