New Delhi: Investments in mutual funds slumped substantially in August, with the industry witnessing a net fund inflow of over Rs 32,600 crore, a 74 percent decline on a month-on-month basis.
At the end of August, investors poured in funds worth Rs
32,673 crore, down from Rs 1,23,679 crore at the end of July,
a monthly report by Association of Mutual Funds of India said.
Despite the slump in the volume of net investment,
investors continued to prefer mutual funds as an investment
option as inflows continued for the second straight month.
During August, fixed income plans with assured returns
annually, saw a maximum investment of only Rs 38,275 crore.
"Uncertain interest rate scenario in the country are
making investors put in money in fixed income schemes. Also
volatility in the equity market saw investors pulling out from
such funds," Kotak Mutual Fund Head (Fixed Income and Product)
Lakshmi Iyer said.
However, equity funds investing in stocks saw net
outflows of Rs 142 crore and liquid or money market funds,
with higher liquidity and short maturity period, saw outflows
worth Rs 5,215 crore.
"Income funds were in demand in August. Banks and
corporate houses have parked their surplus cash with the fund
houses, thereby leading to an increase in the assets under
management (AUMs)," Taurus MF Managing Director RK Gupta said.
Gilt funds, which invest in government securities, saw
outflow to the tune of Rs 446 crore during August.
Analysts feel that after a hefty pull out from MFs in the
last fiscal, investments are picking up this year, with June
being the only month to witness outflows worth Rs 83,937
So far this fiscal, the MF industry has seen net inflows
worth Rs 2,56,755 crore, while the same was at Rs 48,128
crore in the first five months of the previous fiscal.
"Inflows into the MFs would pick up further as and when
the equity market stabilises. The current volatility in the
stock market is denting investor sentiment and that is keeping
them away from investing in equities," Iyer added.
Analysts believe that volatility in the stock market has
made banks park their surplus cash with income or debt funds
with assured returns which helped the industry's average
assets under management (AUM) breach the Rs seven lakh crore
mark at the end of August.
The combined average AUM of the 36 fund houses hit the
historic Rs seven lakh crore-mark at the end of August at Rs
7,49,911.91 crore, an increase on nine percent over the
"In absence of credit growth, banks are right now sitting
on surplus cash. With the increase in bank deposits banks
are parking money in MFs which helped in increasing the
industry AUM," Gupta added.
First Published: Sunday, September 13, 2009, 12:49