Equity investment fund inflows fall 78% from year’s peak
By Ashley Coutinho
Inflows into equity mutual funds fell for the third consecutive month and are down 78% from this year’s high of Rs 28,463 crore recorded in March, according to Fund Association data. mutual funds in India (Amfi).
Inflows fell 31% month-on-month to Rs 6,119 crore in August as investors opted to book profits amid a rally in benchmarks.
“August’s market rally and elevated valuations prompted wealthy investors to take a tactical call and post profits. Gross sales and monthly SIP flows continue to be robust, however,” said G Pradeepkumar, Managing Director of Union AMC.
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Categories such as large and mid cap, mid cap and small cap funds saw inflows of over Rs 1,000 crore, while flexi cap funds saw inflows of over Rs 2,000 crore. Sector and thematic funds saw outflows of over Rs 1,000 crore.
“Investors continued to take a cautious approach this month and money is temporarily shifting from equities to debt given the rising interest rate scenario,” added Priya Agrawal, Money Coach, LXME.
Benchmarks rose 3.4% in August. Equity programs have now seen inflows for eighteen consecutive months.
August saw the launch of several funds, including names such as Quant Large Cap Fund, IDFC Midcap Fund, Edelweiss Focused Equity Fund Baroda BNP Paribas Flexi Cap Fund and WOC Flexi Cap Fund.
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The SIP pound remained healthy and rose 4.5% to Rs 12,693 crore in August, an all-time high. The number of SIP accounts (5.71 crore), SIP AUM (Rs 6.4 trillion) MF folios (13.64 crore), retail MF folios (10.89 crore) and net AUMs in the framework of retail share plans (Rs 20.1 trillion) all stood at a record high as of August 31, 2022.
NS Venkatesh, Managing Director of Amfi, said: “Monthly SIP Contribution, SIP AUMs, SIP Folios, Global Mutual Fund Folios and AUMs all at an all time high coupled with continued positive flows in most categories of mutual fund schemes, signify an increase and an informed investment preference towards MFS as an asset class. Investors continue to stay fully invested and embrace goal-based investing. »
In the hybrid fund category, arbitrage funds – which aim to generate profits by exploiting price differences of the same underlying assets in different segments – recorded net outflows of Rs 8,548 crore.
Debt-focused funds recorded a net inflow of Rs 49,164 crore in August, compared to an inflow of Rs 4,930 crore the previous month. Liquid funds recorded a large inflow of Rs 50,095 crore in this category, followed by ultra-short duration funds and money market fund.
Experts attribute the flows to rising interest rates and uncertainty over further rate hikes.
“Investors have put their money in short-term debt securities because they are likely to earn a higher rate of interest compared to other traditional investments like a fixed deposit. In addition, short-term instruments offer the ability to move into equities or invest in other instruments on a laddered basis Many companies and investors could also put their money into short-term funds in anticipation of the early tax payment in September,” said Kavitha Krishnan , Senior Analyst – Manager Research, Morningstar India.
Net AUM for the industry stood at Rs 39.3 trillion as of August 31, 2022, a year-on-year growth of 7% and an all-time high.