March 2019 AMFI data - ending year on a high

MF AUM increased in Mar’19 despite outflow in liquid funds 

Overall, the mutual fund (MF) industry’s assets under management (AUM) increased by Rs63200 cr MoM, helped by mark-to-market gains, to Rs23.79trn in Mar’19 despite outflow in liquid funds. In FY19, total inflow was ~Rs1.1trn, comprising Rs76000 cr of liquid funds inflow and Rs99000 cr of equity (excluding arbitrage) inflow; income funds’ outflow was Rs1.21trn and their AUM increased by Rs2.4trn (11% YoY). 

Strong inflow in equity funds in Mar’19 

In Mar’19, equity (excluding arbitrage) net inflow was Rs90.1bn with gross inflow of Rs240bn, the highest in FY19. While net inflow in the ELSS scheme was the highest in FY19, March’19 net flow was slightly lower than in the previous 2 years. Other ETFs witnessed higher net inflow of Rs105bn majorly due to the CPSE ETF tranche. Net outflows have gained momentum in balanced funds and this may continue in the coming months; however, outflow may move partly towards equity funds. 

Income funds seem to be stabilizing

Overall system liquidity remained tight in Mar’19 primarily due to advance tax outflow. Also, the 1-year CP spread over G-Sec is now normalizing back to Sep’18 levels. Income funds witnessed inflow in Mar’19 (only three times in FY19) and the inflow was the highest since Oct’17. Improving system liquidity, and stable yield spread will help income funds receive net inflow in FY20. 

March magic repeats itself - FII inflows and DII outflows 

In Mar’19, MFs withdrew Rs76.6bn (vs. the FY19 inflow average of Rs88.9bn), DIIs withdrew Rs139.3bn and FIIs invested Rs426.7bn in secondary equity markets, the highest ever monthly inflows, helped by block deals. DIIs continued their trend of cashing out in March, investment in CPSE ETF, and LIC increasing its cash holding for government divestment might partially explain this. FIIs have always invested in March for the last 10 years as the first half of the calendar year sees higher inflow. MSCI rebalancing and flows seasonality suggests that FII inflow will moderate. 

SIP gross inflows decreased in Mar’19; too early to extrapolate 

While SIP inflow has stabilized near ~Rs81bn levels, disenchantment towards SIP has been being seen in the last few months both in terms of new SIP registrations as well as in the number of discontinuations. SIP inflow run-rate decreased from Rs80.95bn in Feb’19 to Rs80.55bn in Mar’19. We expect a clear trend to emerge only after Jun’19 once the general elections are over  

Source: AMFI website, SEBI, Adroit research

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