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Insurance & Investment
Mutual Fund News
Mutual funds AUM increases for fifth straight year in FY17
Asset under management of domestic mutual fund industry rose for the fifth straight year by 35 per cent year-on-year, or Rs 4.8 lakh crore to an all-time high of Rs 18.3 lakh crore in FY17.
Equity AUM climbed for the fourth consecutive year in FY17 to touch a new high of Rs 4.8 lakh crore, registering a jump of 40 per cent year on year.
Benchmark NSE Nifty advanced nearly 19 per cent during the previous financial year ended March 31, 2017. The 50-share NSE Nifty index jumped to 9173.75 on March 31, 2017 from 7713.05 on April 1 last year.
The second half of FY17 tumultuous after Prime Minister Narendra Modi banned higher-end currency notes in November amid surprised victory of Donald Trump in the US Presidential elections. However, sentiments again turned in favour of D-Street after BJP win the most populous state Uttar Pradesh.
Equity AUM, as a percentage of India’s market capitalization, increased 40 basis points year-on-year to 4 per cent in FY17, while equity ELSS AUM of the industry rose 47 per cent in FY17 and 21 per cent over last five years.
Equity MFs log Rs 70,367 cr inflow in 2016-17
Investors pumped in more than Rs. 70,000 crore in equity-oriented mutual fund schemes in 2016-17, making it the third successive year of net inflows.
The strong inflows have pushed the asset base of equity MFs by 41 per cent during the period under review.
Market players attributed the phenomenon to continuous participation from retail investors through systematic investment plans (SIPs), along with positive returns from equity funds and steps taken by asset management companies to create awareness among investors.
“2016-17 has been a golden year for the mutual fund industry as net inflows into equity MFs have been positive in each month without exception,” Bajaj Capital Group Director Anil Chopra said.
“Much of the credit can be given to maturity of retail investors who have come up in the ‘learning curve’ by contributing 1.3 crore monthly SIPs adding more than Rs. 4,000 crore per month in various top-performing equity mutual fund schemes.”
According to data from the Association of Mutual Funds in India (AMFI), equity funds, which also include equity-linked saving schemes (ELSS), saw net inflows of Rs. 70,367 crore in 2016-17, a slight drop from Rs. 74,024 crore infusion in 2015-16.
These funds had seen net inflows of Rs. 71,029 crore in 2014-15 and withdrawal of Rs. 9,269 crore in 2013-14.

The gone-by fiscal saw a surge in the number of retail investor accounts, or folios, in equity, equity-linked saving schemes and balanced categories, which grew more than 58 lakh to 4.4 crore.

“The mutual fund industry is at a take-off stage in terms of growth and Indian investors are focussing on investments in equity as an asset class,” said SrikanthMeenakshi, COO, FundsIndia.com, an investment portal for MFs.
The assets under management (AUM) of equity MFs scaled to a record high of Rs. 5.43 lakh crore at the end of March 2017 from Rs. 3.86 lakh crore at March 2016-end.
MF investments in bank stocks hit all-time high of over Rs 1.26 lakh cr
Mutual fund managers continued to be bullish on bank shares, with their allocation to the sector reaching an all-time high of over Rs. 1.26 lakh crore at the end of March, mainly due to cheaper valuations.

In comparison, fund managers’ investments in bank shares stood at Rs. 80,468 crore at the end of March 31, 2016.

“MFs have been adding exposure to financial sector, especially banking stocks due to several reasons — lower valuations due to price corrections, expectation of corporate lending growth returning and better net interest margins, especially after the demonetisation announcement which lowered the cost of funds for many banks,” said KaustubhBelapurkar, Director Manager Research at Morningstar Investment Adviser.

During the past fiscal, many private sector banks, NBFCs and select PSU banks witnessed fresh purchases. Stocks like ICICI Bank and SBI witnessed significant additions, at the same time Axis Bank saw consistent selling, he said.

Besides, fund managers subscribed to the initial public offering of Ratnakar Bank, he added.

Overall, the deployment of equity funds in bank stocks stood at Rs. 1,26,587 crore at the end of March 2017 compared to the previous high of Rs. 1,19,796 crore in the preceding month, as per Morningstar data.

Banking continues to be the most preferred sector with fund managers as they cannot afford to take a bearish call on the banking stocks, given the high weightage attached to the index, he added.

Mutual funds are investment vehicles made up of a pool of funds collected from a large number of investors. They invest in stocks, bonds, money market instruments and similar assets.

Mutual Fund Units involve Investment risks including the possible loss of principal. Please read SID carefully for details on risk factors before investing.

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