India Strategy DMF Flows (Jun-11): Listless Month for Equity Funds :: Morgan Stanley Research,

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India Strategy
DMF Flows (Jun-11): Listless
Month for Equity Funds
Equity funds report inflows while fixed income
funds report outflows: During June, equity funds flows
turned negative, albeit marginally (at Rs0.18 billion).
This is the second occasion for negative flows in equity
funds in 2011. Fixed income flows reported outflows for
the second successive month (of Rs624 billion). Flows
in liquid as well as income funds remained negative at
Rs458 billion and Rs166 billion, respectively. In
aggregate, domestic mutual funds experienced outflows
of Rs624 billion. Notably, the aggregate gross level
activity (sales + redemption) fell to its lowest level since
Feb-09. At the end of June, industry assets stood at a
three-month low of US$150 billion, down 8% MoM.
Equity funds: In 2011 thus far, inflows in equity funds
aggregate to Rs50 billion as compared to inflows of
Rs3 billion for the same period in 2010. By the end of
June, equity assets under management stood at
US$45 billion – up about 1% MoM. The share of
domestic equity assets to market cap fell further to
2.96% – its lowest level since Aug-05.
Fixed-income funds: In 2011 thus far, inflows in fixed
income funds aggregate to Rs484 billion compared with
outflows of Rs553 billion for the same period in 2010.
During 2011, liquid and income funds reported inflows of
Rs453 billion and Rs30 billion, respectively. At the end
of June, fixed income assets stood at US$105 billion –
down 11% MoM.
Monthly Fund Tracker: At the end of June, assets of
gold funds hit a new high at Rs56 billion. Year to date,
AUM for liquid funds and gold funds are up 61% and
58%, respectively. During June, AUMs of liquid funds
saw the sharpest decline.
Sector Trends: SEBI data suggests (through May), that
since the start of 2011, domestic mutual funds have
added the most positions in Financials, followed by
Consumer Staples while the reduced positions the most
in Industrials.