The net monthly flows in debt mutual funds rose from ₹43,431 crore in April 2020 to ₹94,224 crore in May 2020, according to a tweet put out by the Association of Mutual Funds of India (Amfi). The jump of ₹50,793 crore is more than a 100% growth in monthly flows.
However, it is unclear how much of this money has come into the relatively low-risk categories of liquid and overnight funds and how much into categories like credit risk funds that saw huge redemption in the past few months. The total debt fund assets under management (AUM) at the end of April 2020 was ₹7.44 trillion, and May’s inflow of ₹94,224 crore has resulted in a 12% jump in assets.
AUM data on categories other than liquid and overnight funds is disclosed on a daily basis and gives a rough idea of flows in individual categories. An increase in AUM happens due to flows and returns but returns are a relatively small component on a monthly basis, especially in debt funds.
According to data compiled by mutual fund analytics and research firm Pulse Labs, as of 27 May, credit risk funds saw a drop in AUM of ₹5,204 crore over the past month and medium-term funds saw a drop of ₹1,464 crore. In case of credit risk funds, this was about 16% of their assets and for medium duration funds, it was about 7% of their assets.
On the other hand, relatively low-risk categories saw increases in AUM. Money market funds saw an AUM increase of ₹7,014 crore, banking and PSU funds saw an AUM increase of ₹9,529 crore and corporate bond funds saw an AUM rise of ₹4,819 crore.
“Inflows have picked up in the relatively low-risk categories and outflows have slowed in high-risk categories. It’s possible that some of the flows may be coming from banks given the amount of liquidity in the system," said Kaustubh Belapurkar, director, fund research, Morningstar Investment Advisor India.