According to Crisil Research, the 2 per cent month-on- month rise in mutual fund assets in February 2012 was largely due to mark-to-market gains notched by equity funds and inflows witnessed in money market funds.
Owing to the uptick in the equity market, assets of equity funds rose by Rs 61 billion to Rs 1.86 trillion.
The benchmark S&P CNX Nifty rose around 4 per cent in February on the back of persistent foreign institutional investor (FII) inflows and firm global cues.
FIIs bought equities worth Rs 252 billion in February, the highest monthly net buying since records are available and compared to Rs 111 billion in January,Crisil Research said.
The equity funds category, however, saw outflows of Rs 28 billion in the month, possibly due to redemptions by investors aiming to lock gains.
"This was the second consecutive month of outflows in the category as investors booked profits on recent gains in the market," the report said.
Inflows into liquid funds was another positive factor for mutual funds assets. The category saw net inflows of Rs 69 billion in February 2012, taking the total asset tally for the category to Rs 1.57 trillion (up 6.5 per cent) by February end.
Income funds, another type of debt-focussed mutual funds, witnessed outflows for the fourth consecutive month. These outflows were the second biggest drag on overall mutual fund industry assets in February.
In February the segment witnessed an outflow of Rs 25 billion taking the total net outflows in the past four months in the category to Rs 226 billion.
"Redemptions from the ultra short-term debt and short-term funds in this category could be a reason for the outflows as investors shift their preferences to long-term debt funds due to peaking of interest rates," the report said.
Fixed maturity plans (FMPs) continued to garner majority of the new fund offers (NFOs) in the month. As many as 64 FMPs were launched in the month, garnering Rs 113 billion.
An analysis of month-on-month mutual fund flows and AUM distribution, shows that so far this year money market funds, gilt funds and gold ETF funds witnessed net inflows of Rs 332.89 billion, Rs 4.33 billion and Rs 1.67 billion respectively.