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Monday 17 February 2020

Investors repose faith in mutual funds; assets swell

Mumbai: Investors have pumped Rs 1.4 lakh crore into mutual funds in April, driving the industry asset base to a staggering Rs 23.25 lakh crore, a surge of 9% from the preceding month.

In comparison, assets under management (AUM) of the MF industry, comprising 42 players, were at Rs 21.36 lakh crore in March-end, according to the latest update with Association of Mutual Fund in India (Amfi).

Industry experts attributed the surge in AUM to ‘aggressive’ investor awareness campaign both at the individual as well as at industry level.

In addition, they added, investors are moving towards financial asset class for investment instead of buying traditional asset classes such as real estate and gold, which also helped in increasing the penetration of mutual funds.

Moreover, systematic investment plan (SIP) has also given the investors a choice as well as a flexibility of investing periodically or in lump sum as per their preference, said COO Harsh Jain at Groww, an online platform which sells financial products including mutual funds.

Overall, investors have poured in a net Rs 1.4 lakh crore in mutual fund schemes last month as compared to redemptions of Rs 50,752 crore in March due to new tax on long-term equity gains.

The latest inflow has been mainly driven by contributions from liquid or money market category and equity funds.

The liquid funds or money market category — with investments in cash assets such as treasury bills, certificates of deposit and commercial paper for shorter horizon — witnessed an infusion of over Rs 1.16 lakh crore.

Besides, equity and equity-linked saving schemes saw an inflow of more than Rs 11,000 crore. Further, income funds which invest in a combination of government securities witnessed an infusion of Rs 5,220 crore.

In contrast, a net sum of Rs 436 crore and Rs 54 crore being pulled out from gilt and gold exchange traded fund (ETF) respectively.

Mutual funds are investment vehicles made up of a pool of funds collected from a large number of investors. The funds are invested in stocks, bonds and money market instruments, among others.

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