The last few months have seen uninterrupted inflows into the equity schemes driven by the positive performance of equity markets. The latest data from Association of Mutual Funds in India (Amfi) shows that, the share of equity oriented schemes in mutual funds rose from 22% to 30% from March 2014 to December 2014.
The data from Amfi also stated that, individual investors increased their investment in mutual funds from R3.99 lakh crore in March 2014 to R5.25 lakh crore in December 2014, an increase of 31.68%. Individual investors contributed 44.19% of the assets in March 2014. This increased to 46.28% by December 2014. Even folios of investors in equity funds have moved up. Till December, folios in equity schemes stood at 3.03 crore, of which 2.96 crore were of retail investors.
SN Baheti, MD and CEO at IDBI Asset Management said, “We have seen healthy equity flows in the last few months. Even though markets are somewhat overpriced currently, flows into equity funds have continued. Investors have entered equities on the back of expectations that growth will come back and reforms will continue.”
On the other hand, debt funds saw fall in their assets from 52% in March 2014 to 45% in December 2014. Market participants say that the decline in debt fund assets was largely due to the change in the taxation structure of debt funds. “Some investors had to re-work their strategy in fixed maturity plans (FMPs) and other debt products due to changes in the tax structure,” added Baheti. In the last Budget, finance minister Arun Jaitley had proposed a hike in the long-term capital gains tax on debt mutual funds from 10% to 20% and extended the holding period to 36 months from 12 months.
However, fund houses are hopeful that debt funds will see inflows going forward. “With interest rates poised to come down from current levels we expect more money to flow into debt funds,” said a top MF CEO.
Currently, total assets under management (AUM) of the mutual fund industry stands at R11,81,356 crore as on January 2015, a rise of 12% compared to R10,51,343 crore in December 2014.