1. Equity mutual funds in midst of dream run, says Morgan Stanley

Equity mutual funds in midst of dream run, says Morgan Stanley

Domestic equity mutual funds received inflows of $3.9 bn, the highest ever in any month. Including ETFs, inflows stood at $4.1 bn.

By: | Published: September 12, 2017 4:55 AM
Equity strategy, equity market, Equity mutual funds, mutual funds, Domestic equity mutual funds, midst of dream run, Morgan Stanley Domestic equity mutual funds received inflows of .9 bn, the highest ever in any month. Including ETFs, inflows stood at .1 bn.

Domestic equity mutual funds received inflows of $3.9 bn, the highest ever in any month. Including ETFs, inflows stood at $4.1 bn. In the month of August, equity flows were positive for the 17th straight month. Year-to-date, domestic mutual funds have received equity inflows of $18.6 bn. By the end of the month, equity mutual fund AUM stood at $111 bn, and as a percentage of market cap rose to 5.3%, its highest level since July 2000. Similarly, equity ETF assets rose to new highs of $8.4 bn. Year-to-date, ETF inflows stood at $2.6 bn (Rs 169 bn). Flows in fixed income funds were Rs 356bn. On a year-to-date basis, flows in fixed income flows are similar to equity flows at $19 bn. At August end, fixed income AUM rose to $211 bn. The total AUM for MF industry stood at $322 bn – a record level.

The trends in the two other sources that are driving the domestic flow surge are as follows: NPS’ pension assets stood at $30bn at the end of July. We estimate their equity assets to be at $3.5 bn. Secondly, EPFO has raised its equity allocation to 15% in FY18 from 10% in FY17. As per our estimate EPFO could likely invest Rs 250-300 bn in equities in FY18, of which Rs 57 bn has been invested thus far. We remain of the view that India is in the midst of a domestic
liquidity supercycle.

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