Equity mutual funds continued to witness net inflows for the ninth consecutive month, taking net inflows in equity funds to over R49,000 crore for CY14. Strong equity markets and new fund offers (NFOs) by fund houses led to strong flows into equity funds.
According to the data provided by Association of Mutual Funds in India (Amfi), equity funds saw net inflows of R6,057 crore in December, 2014. However overall fund industry saw net outflows of R41,388 crore, led by huge redemptions from liquid and income schemes. Jimmy Patel, CEO of Quantum Mutual Fund said, “Equity markets have delivered positive returns and that has attracted retail investors into equity schemes. I think investors have started understanding the benefits of investing in equities and that has resulted in strong flows in equity funds.” Patel also believes that, despite volatility in the equity markets, we may see net inflows into equity funds in the coming months. Apart from equity funds, equity linked saving schemes (ELSS) also saw inflows of R594 crore in December 2014.
Income and liquid schemes saw outflows of R1,632 crore and R50,786 crore respectively last month. Dwijendra Srivastava, CIO of debt at Sundaram Mutual Fund says, “It a quarterly phenomenon that we see outflows from debt schemes, especially liquid and money market schemes. But I am confident that in the coming months we will again see inflows into these categories.”
On the other hand, gilt schemes saw net inflows of R2,090 crore and markets participants are expecting flows to improve over time in this category. “Investors are expecting rate cut from the Reserve Bank of India (RBI) and have started coming into long term bonds funds,” added Srivastava.
In the month of December, 15 new equity schemes collected R2,582 crore launched by various fund houses. According to the data from Amfi, 13 schemes were close ended in nature which collected R2,222 crore while remaining two schemes were open ended which collected R360 crore.
Experts say, “We don’t anticipate that the industry will start seeing redemptions due to equity market volatility. Infact we are seeing a trend where investors are entering the market at every dip which is a sign of maturity,” added a CEO of top fund house. However some market participants say that, its too early to predict the trends of equity inflows in 2015 as we might see lot more volatility in the markets as compared to 2014.”