After Mutual Funds registered their highest ever inflows of Rs 20.362 crores in August, the inflows in the month of September totalled to Rs 18,936 crore, even as the broader markets were a bit subdued in the last month. The equity schemes saw net inflows of Rs 22,233 crore, including Rs 2,404 inflows into tax-saving MF schemes, according to data released by the Association of Mutual Funds in India.
Total assets under management (AUM) for September stood at Rs 20.4 lakh crore compared with Rs 20.6 lakh crore at the end of August. “There has been some amount of profit booking too in the equity schemes, but overall it is still going,” Harsha Upadhyaya, chief investment officer (CIO)-equity at Kotak Mahindra Asset Management Co Ltd told CNBC Tv18 last week.
“September was slightly weaker on overall industry flows. But it’s not really something to worry about. Maybe the investors felt jittery after Nifty touched 10,000, or the short term volatility,” he said. However, he points out that SIP inflows continue to gain momentum. “The SIP numbers still continue to be strong. As at end of August MF SIP book stood at Rs 5,200 crore. My guess is it should be around Rs 5,400 crore in September end,” he told the channel last week.
The high inflows into equity MFs have provided a counterbalance to the huge FII selling. Since August, overseas investors have pulled out close to Rs 20,000 crore from the domestic market.
Even as strong inflows continue, mutual fund managers will find it difficult to find value buys.
Nilesh Shah of Kotak AMC says that it will be a challenge for the mutual fund industry to handle record inflows in the equity mutual funds for the month of August. In conversation with CNBC TV18 last month, he said “It’s a challenge to manage Rs 27,000 crores of investments in a month. We are focused on very niche segment of the market.”
As a direct consequence of the staggering inflows, the cash balances are likely to increase. For want of opportunities to deploy excess cash, industry players such as BlackRock Inc’s Indian unit in February shut its DSP BlackRock Micro Cap Fund to new investors. In April this year, Motilal Oswal Asset Management Co had stopped accepting new cash for its Next Trillion Dollar Opportunity Strategy, which mostly invests in small and mid-cap stocks, because it says the rally has made valuations untenable, according to a bloomberg report.