Debt funds see sharp surge in assets under management in May

Several categories of debt funds saw a surge in assets under management (AUM) in May against sharp outflows in April. Categories such as banking and PSU, corporate bond and ultra-short duration saw increase in its daily assets under management (AUM), while credit risk funds continued to witness a fall in its AUM in May.

Data from Association of Mutual Funds in India (Amfi) show that daily AUM of debt funds at the end of May 29 stood at Rs 6.18 lakh crore against Rs 5.92 lakh crore in April — an increase of Rs 26,400 crore.

Dwijendra Srivastava, CIO-debt at Sundaram AMC, said, “There have been inflows in many categories of debt funds in May. One of the reasons for surge in assets of banking and PSU funds and corporate bond funds is because they have good credit quality.”

Banking and PSU funds saw its daily AUM as on May 29 was at Rs 89,565.42 crore, up by Rs 10,378.07 crore. Corporate bond funds saw daily AUM rise by Rs 5,602.82 crore in May compared with April, the data show.

Market participants say after Franklin Templeton closed six debt schemes in April, investors want to stay away from credit funds. The data show that daily AUM of credit-risk funds as on May 29 stood at Rs 30,241.52 crore against Rs 35,820.18 crore in April, a fall of Rs 5,578.66 crore. Apart from credit-risk funds, medium-duration funds also saw a fall in its assets in May. In the debt funds, data on daily AUM of liquid funds and overnight funds was not available. Other categories like short-duration funds, money market and ultra-short duration funds saw a surge in AUM in May.

“We have seen several of corporates and ultra high net worth individuals investing in debt funds. Having said that, most of the investors want to stay away from credit-risk funds and that is the reason they are investing in products that have good quality papers,” a fund manager said.