MF Weekly: Equity mutual funds see record Rs12,727-cr inflow in July


Highlights:


Equity mutual funds see record Rs 12,727-cr inflow in July


Equity mutual funds saw a record inflow of Rs 12,727 crore in July primarily due to a rally in the stock markets and hopes of rate cut by the Reserve Bank. This also marks the 16th straight month of inflows into equity schemes. Prior to that, such funds had witnessed a pullout of Rs 1,370 crore in March 2016. The strong inflows have pushed the asset base of equity mutual funds (MFs) by more than 6 per cent to Rs 6.3 lakh crore at the end of July from Rs 5.91 lakh crore in the preceding month. 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 12,727 crore in July, higher than Rs 8,164 crore in the preceding month.


MFs’ AUM touches record-high of Rs 20 lakh cr in July


The mutual fund industry’s asset base has touched a record high of nearly Rs 20 lakh crore at the July-end, mainly driven by fresh inflows in equity and debt segments. The AUM of mutual fund industry rose from Rs 18.96 lakh crore at the end of June from Rs 19.97 lakh crore by the July-end, as per the data of Association of Mutual Funds in India (Amfi). Asset base of the industry, comprising 42 players, had crossed the milestone of Rs 10 lakh crore for the first time in May 2014 and in a short span of less than three years, the AUM size almost doubled to touch Rs 19 lakh crore last month. Overall inflow in MF schemes stood at Rs 63,504 crore last month. Of this, income funds which invest in a combination of government securities saw inflow of more than Rs 60,000 crore. Further, equity and equity-linked saving scheme (ELSS) saw an infusion of Rs 12,727 crore. However, 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 a pullout of over Rs 19,500 crore.


MF industry adds over 57,000 folios each day in July


According to the latest SEBI data, the mutual fund industry added 12 lakh folios in July, taking the total folio count to close to 6 crore. A rough calculation indicates that the industry has added an impressive 57,000 folios each day in the month of July. Equity funds have added over 7 lakh folios last month. Due to the stock market rally, these schemes have attracted more investors increasing the folio count from 3.42 crore in June to 3.49 crore in July. At the same time, equity funds saw an inflow of Rs. 12,037 crore, shows the latest AMFI data. Also, AUM of equity funds stood at Rs.5.59 crore in July. Surprisingly, ELSS category witnessed a healthy addition of nearly 1 lakh folios in July 2017. Balanced funds continued the positive momentum by adding 2.09 lakh folios. The category received net inflows of Rs.7,864 crore in July.


ICICI Prudential Mutual Fund to launch Bharat 22 ETF


After getting an overwhelming response to CPSE ETFs, the government is planning to raise some more capital through the ETF route with Bharat 22 ETF. The Union Finance Minister Arun Jaitley has announced the launch of a new ETF called ‘BHARAT 22′. ICICI Prudential Mutual Fund will manage the new ETF in which the government plans to divest its stake in 22 companies. Bharat 22 consists of 22 stocks of CPSEs, PSBs & strategic holdings of SUUTI. Compared to energy heavy CPSE ETF, Bharat 22 is a well diversified portfolio with 6 sectors (basic materials, energy, finance, FMCG, industrials & utilities). The Bharat 22 Index will be rebalanced annually. While ICICI Prudential AMC will be the ETF manager, Asia Index Private Limited (JV BSE and S&P Global) will be the index provider, said the press release. In the Budget Speech of 2017-18, the Finance Minister had promised to use ETF as a vehicle for further disinvestment of shares. The target for CPSE’s disinvestment in 2017-18 was set at Rs.72,500 crore.

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