Out of the net assets of Rs.12.9 lakh crore of debt AUMs, liquid funds continued to have the highest share at 36%.

The mutual fund industry saw its assets under management (AUM) jump to Rs 24.5 lakh crore in the month of May, from Rs 23.9 lakh crore AUM recorded at the end of last month. Despite this, the AUM of the mutual fund industry has eroded 5.4% since May 2019. Even after the recent troubles that the debt mutual funds have faced, they make up for more than 50% of money invested in the industry, a report by Care Ratings showed. At the end of May 2020, debt schemes accounted for 52.4% of the total AUM of mutual funds with Rs 12.9 lakh crore investment. In comparison to April, debt mutual funds have seen a jump of Rs 70,000 crore in AUM. 

Out of the net assets of Rs.12.9 lakh crore of debt AUMs, liquid funds continued to have the highest share at 36%, Care Ratings said. Liquid funds received Rs. 61,871 in net inflows in the month of May, down from Rs 68,848 crore seen in the month of April. Fixed-term plans, short-duration fund, corporate bond fund, low duration fund, and overnight funds made up the other top debt schemes. Compared to debt schemes, equity mutual funds manage net assets nearly half of that of the former. “In May 2020, investors’ net inflows in open-ended equity-oriented schemes were Rs.5,257 crore, the lowest since the start of 2020,” Care Ratings said.

The net assets of the debt AUMs decreased to Rs.12.9 lakh crore on-year basis compared with Rs.13.3 lakh crore in May 2019 and increased on a monthly basis from Rs.12.2 lakh crore in April. “In May 2020, the largest proportion of funds of debt AUMs were invested in corporate debt papers worth Rs.3.87 lakh crore,” the report said. Corporate debt papers include floating rate bonds, non-convertible debentures among other instruments. The second-highest category in which debt AUMs invested their money was Commercial Papers (CPs) with Rs.3.12 lakh crore, followed by bank certificates of deposit at Rs.1.05 lakh crore.

Mutual funds have been trimming their exposure to the non-banking financial services (NBFC) for long and in the month of May, the overall exposure of MFs to NBFCs stood at Rs.1.45 lakh crore. The mutual fund industry was exposed to Rs 3.27 lakh crore credit towards NBFCs in July 2018. “Post-September 2018, after the liquidity crisis triggered in the NBFC space, MFs withdrew over 50% of their investments from this category,” Care said. Equity mutual funds meanwhile were seen parking their funds in banks, consumer non-durables, finance, software and pharma sectors in the month of May.