While equity markets were hammered on Monday amid a global selloff, mutual fund houses continued to see inflows. Asset managers are encouraging investors to put their money in balanced funds — and not pure equity funds — as markets are likely to remain unsettled over the next few months. On Monday, the Sensex plunged the most since 2009, closing at 25,741.56, down 1,624.51 points, or 5.94%.
Dinesh Kumar Khara, MD & CEO, SBI Asset Management company (AMC), said: “Despite such a sharp correction, our fund house didn’t see redemptions. In fact, we got net inflows on Monday. It shows retail investors are pumping in money whenever there is a correction in the equity market.” Tuesday saw Indian markets bounce back as they closed with gains of over 1%. Mutual fund participants are confident of seeing net inflows even in August.
In the last 15 months, equity funds have seen net inflows.
Data from the Association of Mutual Funds in India (Amfi) show MF inflows at over Rs 32,000 crore in this fiscal so far.
“I think Indian investors have understood that there was nothing wrong with the fundamentals and the fall in equity markets was mainly due to the slowdown in China. We believe retail investors will continue to put money in equity markets through mutual funds,” said Khara. Mutual fund players say flows are not only coming in from the top-15 cities, but also beyond, which is a significant success for the industry.
AUMs from beyond-15 locations grew from R1.82 lakh crore in July 2014 to Rs 2.04 lakh crore in July 2015, show data.
A marketing officer from a leading fund house said: “It was quite surprising that a few of the top fund houses got net inflows on equity side. With weak China markets and expectations of hike in interest rates in US markets, volatility will continue in Indian markets. Given such a situation, we are cautioning investors to go for balanced funds at this point of time and not go aggressively into equity funds.”