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Assets under management (AUM) of the Indian mutual fund industry fell nearly 10%, or by R91,152 crore to R8.25 lakh crore in March. On a net basis, the total outflows for the industry amounted to R1.09 lakh crore, the highest monthly outflows since March 2011.
The decline was due to the outflows from liquid and market schemes, which saw outflows to the tune of R1.17 lakh crore. Heavy outflows in this category are common in the last month of the financial year, when banks and corporates pull out money to shore up their balance sheets.
After four months of sustained inflows, equity schemes also witnessed outflows in March, a month when the equity market consistently hit new highs.
Equity schemes saw outflows to the tune of R2,102 crore, compared with inflows of R572 crore in February. The benchmark BSE Sensex rose 6% in March as overseas investors turned bullish on India ahead of the national elections. The category had witnessed total inflows of R3,054 crore between November and February.
Among other categories, gilt funds saw modest outflows of R377 crore compared with outflows of R937 crore in February. Investors continued to exit gold exchange traded funds (ETFs) for the 10th consecutive month in March amid weak sentiment for the underlying asset class. Gold ETFs saw outflows of R149 crore in the month similar to outflows of R178 crore seen in the previous month.
Income funds saw inflows of R7,838 crore compared with inflows of R12,955 crore the previous month. Other ETF categories saw inflows of R3,087 crore. The MF sector has been struggling ever since the entry load was banned in August 2009, with just 20 months of net inflows in equity schemes.