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  1. Equity, balanced mutual fund inflows take a pause in January; is this a temporary blip?

Equity, balanced mutual fund inflows take a pause in January; is this a temporary blip?

The mutual fund inflows seem to have taken a short pause, as inflows from equity and equity-linked scheme in January declined 4 percent on month to Rs 15,390 crore, and balanced funds saw a 21 percent fall in net inflows at Rs 7,665 crore. Is this a temporary blip?

By: | Published: February 8, 2018 4:51 PM
FM Arun Jaitley presented Union Budget 2018 on 1st February, 2018 Inflows from equity and equity-linked scheme in January declined 4 percent on month to Rs 15,390 crore. (Image: Reuters)

After investors pumped in a record Rs 1.3 lakh crore in equity mutual funds in 2017, the fund inflows seem to have taken a short pause, as inflows from equity and equity-linked scheme in January declined 4 percent on month to Rs 15,390 crore, and balanced funds saw a 21 percent fall in net inflows at Rs 7,665 crore. According to industry insiders, balanced funds saw some moderation in inflows investors turned cautious with valuations soaring. According to Sunil Subramanian of Sundaram Mutual Fund, the equity inflows are slightly lower due to booking of gains ahead of the Budget. “The jump in overall inflows reflects the rebound in liquid schemes after a pullout at the end of December quarter by institutions,” Sunil Subramanian told Bloomberg.

However, experts point out that the inflows are slated to rebound in the mutual fund industry, due to increasing use of SIPs. Alok Singh, Chief Investment Officer at BOI AXA Mutual Fund tells FE Online that the inflows will not slow down substantially, as its the long-term savings of the people coming in to the market. According to Alok Singh, the investors are realizing the importance of SIPs in long-term wealth creation.

Taking note of the SIP investments, India’s central bank RBI said in its recent Financial Stability report, “Contributions to mutual funds through systematic investment plans (SIPs) has added further stability to this sector.” The apex bank also noted the rising investments from B-15 cities in India.  AUM of B-15 cities grew 230 per cent in 2016-17 of what it was in 2012-13, according to the report. “Diversity in terms of the investor base will provide resilience against redemption pressures in case the markets see corrections in their valuations,” RBI said in the report.

The latest inflow has helped in pushing the AUM of the country’s 42-player mutual fund industry to a historic high of Rs 22.41 lakh crore at the end of January from Rs 21.26 lakh crore at December-end 2017.Bajaj Capital CEO Rahul Parikh told PTI that , digital investment platforms are going to be a big driver for the industry.  “These platforms are the best bet to attract the young salaried generation of millennials – who otherwise are humongous spenders on gadgets, cars and bikes – and inculcate in them the virtues of saving and investing,” PTI reported Rahul Parikh as saying.

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