The Indian mutual fund industry's assets under management (AUM) surged to a new record high, surpassing the Rs 13 trillion mark, in July. AUM rose 12.23% or by Rs 1.44 trillion (the highest absolute gain in over four years) to Rs 13.17 trillion as per the latest numbers declared by the Association of Mutual Funds in India (AMFI). The increase was led by liquid, income and equity funds.

Cyclical inflows worth Rs 898.25 billion made liquid funds the biggest contributor to the industry AUM in July. The category's assets swelled by Rs 936.03 billion, helped by inflows and mark-to-market (MTM) gains, to Rs 3.01 trillion. Historical trend shows that quarter-end outflows in the category are reversed at the beginning of the following quarter as banks and corporates re-invest surplus funds, which they had earlier withdrawn, to meet quarter-end reserve requirements and payment towards advance tax outflows, respectively, CRISIL said.

Equity funds see 15th consecutive month of inflows and close in on the Rs 4 trillion mark Equity funds' AUM marched toward the Rs 4 trillion mark helped by MTM gains and inflows. AUM rose 5.67% or by Rs 211.14 billion to a record high of Rs 3.93 trillion in July. The category logged inflows for the 15th consecutive month, albeit lower at Rs 60.43 billion compared with Rs 122.73 billion in June. The underlying asset represented by the CNX Nifty gained 1.96% in July.

Increasing popularity of equities aided balanced funds, which invest a major portion of their AUM in equity. The category attracted inflows of Rs 13.59 billion, 14th consecutive month of inflows, in July. Inflows and MTM gains led the category to scale a new high of Rs 345.50 billion, up 7.10% or by Rs 22.91 billion.

Income funds attracted strong inflows of Rs 216 billion, highest since October 2012, amid hopes of more interest rate easing by the Reserve Bank of India (RBI). The central bank, however, maintained a status quo in its latest policy meeting on August 4. Income funds' AUM rose 5.08% or by Rs 268.53 billion to Rs 5.56 trillion on the back of strong inflows and MTM gains.

Gilt funds witnessed inflows of Rs 1.91 billion in July, reversing outflows of Rs 2.79 billion in the preceding month. Inflows clubbed with MTM gains helped the category's assets rise 2.74% or by Rs 4.17 billion to Rs 156.10 billion.

Gold exchange traded funds (ETFs) continued to loses lustre as negative sentiment for the underlying asset class weighed on the category' assets. The category has posted outflows since May 2013. Cumulative outflows total Rs 40.19 billion. AUM fell 8.58% to Rs 59.57 billion in July led by outflows and a sharp fall in price of gold. The price of gold (represented by the CRISIL Gold Index) fell 7.80% in July.