Equity mutual funds saw an inflow of Rs 10,790 crore in May, making it the highest in nearly two years, underpinned by investor optimism and steps taken by fund houses to create awareness about MFs. This also marks the 14th straight month of inflows into equity schemes. Prior to that, such funds had witnessed a pullout of Rs 1,370 crore in March 2016. The strong inflows have pushed the asset base of equity mutual funds (MFs) by 2.6 per cent in May from the preceding month.
“Investor awareness programme and paperless investing platform for mutual fund investing are the two major factors that have facilitated this growth in net inflows. In addition to these, even the investors’ confidence in MF has increased. Now, they are holding their investments in equity oriented schemes for a longer period of time for both lump sum as well as Systematic Investment Plan (SIP) investments,” Bajaj Capital CEO Rahul Parikh said.
SIP is an investment vehicle that allows investors to invest in small amounts periodically instead of lump sums. The frequency of investment is usually weekly, monthly or quarterly. According to data from the Association of Mutual Funds in India (Amfi), equity funds, which also include equity-linked saving schemes (ELSS), saw net inflows of Rs 10,790 crore in May, higher than Rs 9,429 crore in the preceding month.
This was the highest net inflow since June 2015, when equity MFs racked up an inflow of Rs 12,273 crore. In May 2016, these funds had seen a net inflow of Rs 4,721 crore.
The assets under management (AUM) of equity MFs scaled a record high of Rs 5.83 lakh crore at the end of May 2017 from Rs 5.69 lakh crore at April-end. MFs are investment vehicles made up of a pool of funds collected from a number of investors. The funds are invested in stocks, bonds and money market instruments, among others.