Mutual fund industry's total assets decline for the second consecutive month

Total assets under management (AUM) for the mutual fund industry declined for the second consecutive month to Rs 35.6 trillion (-4.2 per cent month-on-month) in June'22 -- the lowest level since August'21 -- led by a decline in AUM for income (Rs 711b), equities (Rs 405b), liquid (Rs 219b), other ETFs (Rs 115b).

A report by Motilal Oswal Financial Services said equity AUM for domestic MFs (including ELSS and index funds) decreased 2.9 per cent MoM to Rs 13.8t in June'22. This was due to a decline in equity scheme sales (down 7.6 per cent MoM to Rs 355b).

Further, market indices closed lower (the Nifty was down 4.8 per cent MoM). At the same time, redemptions dipped 15.4 per cent MoM to Rs 127b - at a 25-month low. Consequently, net inflows declined marginally to Rs 228b in June'22, from Rs 234b in May'22.

The month saw notable changes in the sector and stock allocation of funds. On a MoM basis, the weights of automobiles, oil & gas, consumer, healthcare, telecom, and PSU banks increased, while the weights of private banks, metals, NBFCs, cement, retail, utilities, textiles, insurance, and chemicals moderated.

Automobiles' weight increased for the third consecutive month to a 42-month high of 7.6 per cent (+50bp MoM, +110bp YoY). The sector now ranks third in the allocation of mutual funds -- it was in the fourth position a month back. Oil & Gas weight stands at a 18-month high of 7.3 per cent (+20bp MoM and +40bp YoY).

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