Millennium Post

Mutual funds' AUM inching towards Rs. 20 lakh crore mark

Backed by a booming stock market and increasing interest from retail investors, the assets under management (AUMs) of the mutual fund industry is likely to touch the magical mark of Rs 20 lakh crore next month.

Moreover, investment by the MF players in the equity market has surpassed that of foreign institutional investors, figures from industry body AMFI have revealed.

The AUM of the country's MF industry grew 9.8 per cent to Rs 19.26 lakh crore in April, from Rs 17.54 lakh crore in March, and it was likely to cross the Rs 20 lakh crore milestone in the next month itself if the assets grow by another 4 per cent, according to AMFI data collated by rating agency Icra.

AMFI, or the Association of Mutual Funds in India, is a nodal association of MFs across the country. Of the Rs 1.5 lakh crore that investors pumped in different categories in April, liquid, income, and equity funds (including equity-linked savings schemes or ELSS) saw the highest inflows, it said.

The three categories saw net inflows of Rs 0.99 lakh crore, Rs 0.35 lakh crore and Rs 0.09 lakh crore, respectively.

Equity funds also got support from the broader market rally as the BSE Sensex hit an all-time high of 30,000 in April.

Equity funds (including ELSS) witnessed net inflows of Rs 9,429 crore in April, an increase of 14.8 per cent MoM and 112.5 per cent YoY. This comes on top of over Rs 70,000 crore investments in equities in the fiscal 2017.

In April, net inflows via the SIP route hit an all- time high of Rs 4,200 crore, the data showed. According to the AMFI, the industry added around 6.26 lakh SIP accounts every month on an average during the last fiscal with an average ticket size of Rs 3,660 per account.

MFs pumped in Rs 54,912 crore into the country's equity market as against Rs 52,977 crore by FIIs/FPIs during the year gone by. The trend continued in April where MFs' quantum of net investment in equities stood at Rs 9,918 crore compared with Rs 2,417 crore by FIIs/ FPIs, the report said.

Total folio count at the April-end grew 1.3 per cent at 5.61 crore from March, a SEBI data said.

Folios are numbers designated for individual investor accounts, though one investor can have multiple accounts.

The growth was primarily on the back of 5.85 lakh new folios added to the equity category (including ELSS) and 1.5 lakh new folios to the balanced category. Exchange-traded funds were the only category to witness a decline of 20,000 folios, which could be due to the category's underperformance compared with the actively-managed funds, it added.

In the last 12 months, assets from beyond 15 cities, or B15 towns, have grown 43.9 per cent due to investor- friendly initiatives by the regulator and awareness campaigns by asset management companies (AMCs).

The B15 assets grew Rs 98,525 crore to Rs 3.23 lakh crore in April from Rs 2.24 lakh crore a year ago.

Firms raise record Rs. 6.41 lakh cr via debt placement in FY17

Indian companies raised a record Rs 6.41 lakh crore last fiscal through private placement of corporate bonds to meet business needs, a surge of 40 per cent from the preceding year.

These funds have been raised mainly for expansion of business plans, repayment of debt and to support working capital requirements.

In debt private placements, firms issue securities or bonds to institutional investors to raise capital.

According to latest data available with markets regulator Sebi, firms garnered a total of Rs 6,40,715 crore in 2016-17, higher than Rs 4,58,073 crore raked in the preceding fiscal.

This was the highest ever fund raising by companies in a financial year since 2001-02, when the firms had raked in Rs 45,427 crore.

In terms of numbers, 3,377 issues were made in last financial year compared to 2,975 in 2015-16. Bajaj Capital Senior VP and Head Investment Analytics, Alok Agarwala attributed the high inflow in the current fiscal to volatile and weak sentiments in equity markets.

"Volatile and weak sentiments in equity markets encouraged companies to raise capital through private and public bond issues instead of equity issues. Also, cost of raising debt was lower in 2016-17 as interest rates fell.

"At the same time, there were various regulatory initiatives for deepening Indian bond markets such as banks being allowed to issue Additional Tier 1 Bonds, to meet their capital requirement, investment limit for foreign portfolio investors being increased and the withholding tax rate being reduced from 20 per cent to 5 per cent," he said.
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