Equity mutual fund inflows plunge to near two-year low of Rs 6,606 crore; key things to know

By: | Published: January 8, 2019 5:22 PM

Even as we continue to see heightened volatility in the stock market, equity mutual fund inflows have plunged to a 23-month low of Rs 6,606 crore in December.

MFs add Rs 1.24 lakh cr to asset base in 2018 on SIP flows, strong retail participationAcross all schemes, the mutual fund industry registered a net outflow of Rs 1.36 lakh crore compared with a net inflow of Rs 1.42 lakh crore in the preceding month.

Even as we continue to see heightened volatility in the stock market, equity mutual fund inflows have plunged to a 23-month low of Rs 6,606 crore in December. The inflows represent a 21.5% decline as compared to the previous month inflows of Rs 8,414 crore. Notably, the inflows were much higher at Rs 12,622 crore in the month of October. Across all schemes, the mutual fund industry registered a net outflow of Rs 1.36 lakh crore compared with a net inflow of Rs 1.42 lakh crore in the preceding month, data released by the Association of Mutual Funds in India showed.

This is the highest outflow since Rs 2.3 lakh crore total outflows in September, when IL&FS crisis spurred the biggest monthly withdrawal from money-market schemes in at least a decade. Interestingly, while the overall outflows have peaked, and the inflows into the equity mutual funds remained tepid, SIP inflows continue to remain robust. Retail investors continue to invest into mutual funds using SIPs.

Also read: 2019 stock market strategy: Here’s where retail investors can look to invest

Mutual funds saw inflows to the tune of Rs 8,022.33 crore of its assets through SIP in December 2018, implying a jump of 29% on-year, data from AMFI showedi. Mutual funds collected Rs 7,985 crore through SIPs in November. Notably, SIP folios have increased by over two lakh folios. Month end average AUM of the industry stands at Rs 22.85 lakh crore as on December end 2018.

Taking stock of the rise in SIP investment, Ashish Nasa, Head of Wealth Management, NRI and Relationship Banking at Equitas Small Finance Bank notes that SIPs have become akin to Recurring Deposits in popularity. “From a largely unknown instrument, it has now become a household name – as popular as probably RDs (Recurring deposits) a decade ago. If data from Banks is put in public domain, it may not be surprising that SIP growth rates could be even higher – and why not – after all they are tax efficient, well-diversified and offer higher potential returns (although with higher volatility),” Ashish Nasa told FE Online recently.

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