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Gilt Funds See Highest Inflows As Bond Yields Fall

Author: Administrator Account/Wednesday, February 24, 2010/Categories: Mutual Funds

Gilt Funds See Highest Inflows As Bond Yields Fall

The sharp fall in bond yields in recent months amidst growing expectations of an interest rate cut by the Reserve Bank of India (RBI) is seeing renewed interest in gilt funds. The category attracted net inflows of Rs 8.14 bn; the highest net inflows in the past 15 months.

The yield of the 10-year benchmark 8.40% 2024 bond fell to 8.09% on November 28, 2014 from 8.28% on October 31. Inflows clubbed with MTM gains resulted in 15.28% or Rs 9.41 bn rise in its assets to Rs 70.99 bn, according to a report by Crisil.

Income funds too, which had been facing redemption pressure following the tax changes announced in the Union Budget, saw strong inflows for the second consecutive month. The category logged net inflows of Rs 198.44 bn – highest since May 2013 – on falling yield (rise in prices).

Equity funds continued to attract net inflows (Rs 49.63 bn) for the seventh consecutive month in November on the backdrop of positive sentiment for the asset class. The positive sentiment also led to increase in new fund offers (NFOs), which too contributed to inflows.

Overall, the Indian mutual fund industry’s assets under management (AUM) fell marginally in November 2014 to Rs 10.90 trillion, down 0.49% or by Rs 53.44 bn, from Rs 10.96 trillion in October 2014 according to the monthly numbers released by the Association of Mutual Funds in India (AMFI), the Crisil report said.

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