MFs may see revival of flows into equities by early 2013
Mumbai: Mutual fund industry is likely to see revival of some flows into equity schemes by early 2013 on the back of gains in average assets under management (AUM) in equity portfolios coupled with low bond yields, says a research report.
"Two conditions that supported the high growth of equity AUM during 2003-08 may be revived by early 2013-gains in investors' portfolios and low bond yields," a report by Avendus Securities said on Wednesday.
The report also said the present conditions are similar to 2003, when rising gains on the AUM and low rates had led to growth in equity portfolios.
The report said the past quarter saw a steady rise in the gains in investors' portfolio of around 6 percent by the end of September, while the yields on AAA-rated yields dipped 50 basis points.
According to the report, the phenomenal rise in stock prices leading to an outflow from equity MFs is nearing an end.
"The three-year long trend of a rise in stock prices, leading to a net outflow from equity mutual funds, may be nearing an end. There could be a return to a phase, where a rise in stock prices stimulates net inflows. Such a pattern has been reported for close to six years between mid-2003 and mid-2009," the report said.
As per the recent data released by the Association of Mutual Funds in India (Amfi), the industry saw an increase of 8 percent in its AUM for the quarter to September.
Average AUM for the July-September period stood at Rs 7,47,332 crore compared to Rs 6,92,788 crore in the year-ago quarter.