The first quarter of current fiscal promised well for the country's Mutual Fund industry as Assets Under Management (AUM) increased for fifth straight quarter to touch a new high of Rs 8.47 lakh crore, said the Association of Mutual Funds in India (AMFI), as per a media report.
The media report said that rise in AUM was helped mainly by robust inflows in long-term debt and gilt funds as investors expected the interest rates to ease amid falling inflation and slowing growth.
After raising the interest rates for two years in 2010 and 2011, the RBI eased its repo rate for the first time in April 2012 and since then, it has reduced the lending rate by 125 basis points. In this scenario, long-term debt funds, which include gilt funds and income funds, outperform other categories as the price of debt instruments and interest rates move in opposite direction.
Times of India (TOI) reported that AUM under the long-term debt funds category increased by a massive Rs 26,500 crore or 31 per cent during April-June 2013—the highest absolute gain for a category since September 2010.
The data showed that short-term debt funds, due to the faster maturity of their underlying securities, witnessed a lesser growth in AUM during the quarter. AUM under this category increased by Rs 11,500 crore at Rs 72,800 crore, said TOI.
On the other hand, equity MFs had no relief in June quarter also as average AUM fell for the sixth straight quarter.