Mutual Fund Assets Rise The Most In A Year To A Record In April

Money managed by mutual funds rose at the fastest pace in a year in April as redemptions driven by a new tax on long-term equity gains eased.

Total assets under management increased 9 percent over the previous month, the most since April 2017, to a record of Rs 23.25 lakh crore in April, according to data released by the Association of Mutual Funds in India. Net inflow across schemes for April stood at Rs 1.38 lakh crore. That compares with an outflow of Rs 50,752 crore the month before.

Investors pulled out money in March due to imposition of the long-term capital gains tax, Sunil Subramaniam, chief executive officer, Sundaram Mutual Fund, told BloombergQuint. “This has reversed in April and we have seen lesser redemptions and hence the inflow into equity markets looks good. Also, the asset under management at a record was helped largely by the liquid/money market category.”

Other Highlights

• Equity assets, including equity-linked savings scheme, rose 6.7 percent to a record of Rs 8 lakh crore.
• Balanced fund category's asset under management grew 5 percent sequentially to Rs 1.8 lakh crore.
• Equity inflow, excluding ELSS, jumped over fourfold to Rs 11,962 crore from Rs 2,954 crore in March.
• ELSS inflow declined 84 percent to Rs 587 crore month-on-month.
• Inflow into liquid or the money market category stood at Rs 1.16 lakh crore compared with an outflow of Rs 54,979 crore in March—the biggest inflow in the category since April 2016.

Total pure equity inflows seem to have gone back to February levels, but balanced funds have seen a considerable slowdown. Balanced funds inflows were the lowest in 15 months. Inflows declined 48 percent month-on-month to Rs 3,500 crore. The two biggest funds by assets in this category—HDFC India Prudence Fund and ICICI Prudential Balanced Fund—gave negative returns of 5.2 percent and 0.3 percent, respectively, in the last six months.

Net asset value has not looked good for a balanced fund investor in the last six months, and even yields have risen. They have not performed well, said Jinesh Gopani, head-equities, Axis Mutual Fund.

He said the systematic investment plans are also picking up.

These are good times to accumulate equity for long-term investors, said Swarup Mohanty, chief executive officer at Mirae Asset Global Investments. These are also extremely good times for SIP investors as they start getting the advantage of rupee-cost averaging by adding units at lower NAVs, he said.