Mutual Fund industry's AUM declines to 11-month low in June, equity inflows stable – All you need to know

The total AUM (Asset Under Management) of the MF (Mutual Fund) industry declined for the second consecutive month to touch an 11-month low at Rs 35.6 trillion in June 2022 – the lowest since August 2021 – led by a decline in AUM for income, equities, liquid, and other ETFs, a report said. 

On Month-on-Month (MoM) basis, the total AUM sipped over 4 per cent in June 2022, according to a domestic brokerage firm Motilal Oswal. 

Similarly, Equity AUM for domestic MFs, including ELSS and index funds, decreased 2.9 per cent, MoM, to Rs 13.8 trillion in the previous month. This was due to a decline in equity scheme sales, down 7.6 per cent MoM to Rs 355 billion. 

The Nifty index slid nearly 5 per cent, MoM, in June 2022 after a 3 per cent decline in May 2o22, the brokerage said, adding that the market closed in the red for the third consecutive month and reported the steepest MoM decline since Mar 2020. 

At the same time, redemptions dipped 15.4 per cent, MoM, to Rs 127 billion – at a 25-month low, Motilal Oswal also noted. Consequently, net inflows declined marginally to Rs 228 billion in the last month as compared to Rs 234 billion in May 2022. 

As per Motilal Oswal, “The adverse macro backdrop, with heightened worries on rising interest rates, elevated crude oil prices, and liquidity tightening, has kept the market volatile and jittery.” 

However, defying all odds, investors continued to invest in MFs with inflows and contributions in systematic investment plans (SIPs) remaining strong at Rs 122.8 billion in Jun 2022 - a tenth consecutive month of Rs 100 billion-plus investment in SIPs, the brokerage added. 

In June, notable changes in the sector and stock allocation of funds. On an MoM basis, the weights of Automobiles, Oil & Gas, Consumer, Healthcare, Telecom, and PSU Banks increased, while the weights of Pvt Banks, Metals, NBFCs, Cement, Retail, Utilities, Textiles, and Insurance moderated. 

Automobiles’ weight increased for the third consecutive month to a 42-month high of 7.6 per cent, the brokerage pointed out. It added that the sector now ranks third in the allocation of mutual funds – it was in the fourth position a month back.