The mutual fund industry, which has just started declaring data for segregated portfolios, began the new year on a losing note with the overall AUM falling around 2 per cent in January, hit by surprise net outflows of a whopping Rs 45,316 crore from liquid funds, a report said.
Other reasons for the fall in overall assets include liquidity tightening measures by the central bank in the month with two special repo auctions, continuing outflows from equity-oriented schemes and the mark-to-market losses in the underlying market assets, Crisil said in a note on Wednesday.
All this had the aggregate assets under management (AUM) dwindling by Rs 52,345 crore or 1.7 per cent to Rs 30.50 lakh crore in January from the record high of over Rs 31 lakh crore in December, according to Amfi data, that excludes the domestic fund of funds, collated by Crisil.
While all the above-cited reasons led to the fall, the pressure on short-term yields pushed money out of short-term debt categories, leading to the net outflows, the agency said.
Liquidity-normalising measures by the Reserve Bank in the first and third week of January in the form of special reverse repo auctions also exerted pressure on short-term yields, resulting in money being removed from open-ended short-term debt categories, it added.
Liquid funds bled the most with net outflows at Rs 45,316 crore, reversing the net inflow of Rs 5,102 crore in December.
In January, low duration and money market schemes reported net outflows at Rs 8,041 crore and Rs 1,043 crore, respectively, says the report.
Long-duration maturity funds like gilts, long-term and medium-to-long term funds also felt the pressure as investors pulled out money ahead of the Budget and the monetary policy. These three categories combined saw Rs 465 crore outflows in the month.
However, corporate bond funds, banking and PSU funds, and short-duration funds continued to attract investor interest in the month to the tune of Rs 5,429 crore, Rs 1,740 crore and Rs 6,893 crore, respectively.
Similarly, credit risk funds saw net inflows of Rs 366 crore in the month, marking the first time the fund flow trend turned positive for the category since April 2019 when the Association of Mutual Funds in India (Amfi) changed its format of dissemination.
Overall asset base of open-ended debt funds fell by Rs 31,926 crore on-month, or 2.3 per cent, to settle at Rs 13.74 lakh crore after hitting a record high of Rs 14.06 lakh crore in December.
For equity funds, this was the seventh straight month of outflows as investors continued to exit open-ended equity funds in January with net outflows of Rs 9,253 crore, marginally better than December when they lost Rs 10,147 crore.
Amfi began dissemination of newly introduced flexi-cap category data separately in January (which is the rehashed version of the erstwhile definition of multi-cap fund category). The new category saw the highest net outflows among open-ended equity schemes at Rs 5,934 crore as 16 multi-cap funds were recategorised as flexi-cap funds in January.
Among other major categories, large cap funds got net outflows for the eighth straight month at Rs 2,853 crore, while multi-cap and sectoral/thematic schemes recorded net inflows of Rs 2,858 crore and Rs 2,586 crore, respectively.
The outflows, coupled with MTM losses of the equity market (as Nifty and Sensex fell 2.5 per cent and 3.1 per cent respectively in January), dragged the open-ended equity fund asset base down by 1.7 per cent to Rs 8.91 lakh crore, it said.