Investment in equity mutual funds drop 37 per cent in FY 2019

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Published: April 9, 2019 1:27:44 AM

One of the reasons for the decline in inflows could be the weak performance of equity funds in the last one year, market participants say. According to the data from Value Research, of a total 374 open ended equity schemes, around 35.3% have given negative returns in the last one year.

Investment, equity, mutual funds, MF drop, market, newsInvestments in equity MFs drop 37% in FY19

Inflows into equity funds stood at Rs 1.07 lakh crore in 2018-19, compared with Rs 1.71 lakh crore in 2017-18, down by 36.9%, show the data from the Association of Mutual Fund in India (Amfi).

One of the reasons for the decline in inflows could be the weak performance of equity funds in the last one year, market participants say. According to the data from Value Research, of a total 374 open ended equity schemes, around 35.3% have given negative returns in the last one year.

The worst performance of the schemes came from the infrastructure sector, small cap funds and mid-cap schemes. Out of 23 mid-cap schemes, 19 schemes have given negative returns in the last one year. In the small-cap segment, out of 15 schemes, only one scheme, Axis Small Cap Fund, has positive returns in the last one year. In the mid-cap segment, schemes such as UTI Mid Cap and Edelweiss Midcap Fund have dipped by 10.56% and 9.96%, respectively, in the last one year. The S&P BSE Midcap TRI index gave returns of -5.02% in last one year.

Jimmy Patel, MD and CEO at Quantum Asset Management Company (AMC), said, “Volatility in equity markets affected returns in some of the fund categories, which impacted inflows into equity schemes. The only positive factor in the last one year was sharp inflows through systematic investment plans (SIPs).” Equity funds include equity, arbitrage and equity linked saving scheme (ELSS) while debt funds include income, liquid and gilt schemes.

Categories like technology, banking and pharma funds are among a few which have given positive returns in the last one year. Value Research data show that technology funds and banking funds have given returns of 19.07% and 12.78%, respectively, in the last one year.While equity funds saw slowdown in inflows, debt funds continued to witness outflows for the second financial year in a row. In the last financial year, debt funds saw outflows of Rs 48,473 crore.

In 2018-19, income and gild funds saw outflow of Rs 1.21 lakh crore and Rs 3,441 crore, respectively. Liquid/money market funds saw inflows of Rs 76,093 crore in the FY19.

Sunil Subramaniam, MD and CEO at Sundaram Mutual, said: “Due to the credit issues which we had seen in the last financial year, institutional as well as high net worth individual (HNIs) moved their money to bank deposits as they were worried about their capital protection.” In the financial year 2017-18, debt funds had seen outflows of Rs 12,064 crore.

Market participants say SIPs flows also become stagnant in the last few months due to the volatility in equity markets. The data from Amfi show that the contribution of SIPs stood at over `8,055 crore in March, against Rs 8,095 crore in February. In last financial year, total SIPs contribution was Rs 92,693 crore.  In the past three-four years, there was surge in SIPs as equity markets touched new high. In 2016-17, total SIP contribution was Rs 43,921 crore while it increased to Rs 67,190 crore in 2017-18. The industry’s assets under management were Rs 23.37 lakh crore as on January 2019.

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