Mutual Fund Update: October AUM grew marginally

The asset under management (AUM) of the domestic mutual fund increased by 0.87 per cent on a month to month basis to Rs. 22.24 lakh crore at the end of October 2018. This increase has come against the background of a sharp outflow in the month of September and huge volatility witnessed in the equity market in the month of October. For the month of September, the AUM of the industry declined by 12.6 per cent and dropped to Rs. 22 lakh crore from Rs. 25.20 lakh crore at August-end. This sudden decline was due to massive outflows from liquid funds and income schemes in the wake of defaults by IL&FS.

Nevertheless, for the month of October liquid funds saw net inflow of Rs. 55,296 crore against an outflow of Rs. 2.11 lakh crore in the month of September. The return of stability in the flows of liquid fund along with consistent retail investment in equity funds led to an increase in the overall MF AUM. The equity schemes, excluding ELSS and arbitrage funds, for the month of October saw a net inflow of Rs. 11,422 crore, which is 11 per cent higher than August 2018 inflows. This net inflow is highest in the last seven months. What also helped such net inflows is lesser outflow from equity fund. The total outflow for the month of October was at Rs. 9,850 crore, which is lowest since December 2016, when the outflow from equity funds was Rs. 10,183 crore.

Systematic investment plan (SIP) continued to grow and for the month of October 2018 saw an inflow of Rs. 7,900 crore against Rs. 7,727 crore in the month of September and Rs. 5,621 crore in the same month last year. This shows retail investors faith in equity mutual funds.