Industry experts say that lump-sum investments have stopped and even some investors are stopping their SIPs, due to the unpredictable equity markets.
Net inflows into equity schemes of mutual funds in April were the slowest in four months at Rs 6212.96 crore as investors turned cautious. Compared to March, net inflows into equity schemes in April declined by 47%.
Data from Association of Mutual Funds in India (Amfi) showed that flows into equity schemes through systematic investment plans in April was at Rs 8,376 crore, which is marginally lower than Rs 8,641 crore inflows seen in March.
Redemptions from equity funds stood at Rs 8,303 crore during the month. Industry experts say that lump-sum investments have stopped and even some investors are stopping their SIPs, due to the unpredictable equity markets. Overall mutual funds saw net inflows of Rs 46,000 crore in April, aided by inflows into liquid and equity funds.
NS Venkatesh, chief executive at Amfi, said, “Investors are waiting at the sidelines and reassessing the situation to see how first quarter earnings are going to be reflected into the share price movements. That is why we saw little lesser flows into the equity funds last month.” In April Sensex was up by 14.4% even as inflows into equity funds slowed down. Average net assets under management (AUM) for equity funds in April stood at around Rs 6.11 lakh crore as compared to over Rs 6.50 lakh crore in March a fall of over Rs 38,659 crore.
Despite the Franklin debacle in April, debt schemes saw positive inflows into liquid funds. Credit risk funds and other medium to low duration funds saw redemptions during the month. Following the winding up of six debt schemes by Franklin Templeton, credit risk funds saw net outflows of Rs 19,238.98 crore in April. Debt oriented schemes saw net inflows of Rs 43,431.55 crore in April, with liquid funds saw net inflows of Rs 68,848 crore.
Jimmy Patel, MD and CEO at Quantum Mutual Fund, said that investors moved money from high risk category to low risk category in April. “Overall investors turned conservative and moved their money to other safer option like liquid and overnight funds from credit risk funds,” said Patel.
Net AUM of mutual fund industry stood at Rs 23.93 lakh crore as on April end compared to Rs 22.26 lakh crore in March 2020. Distributors in the mutual fund industry also say that many investors have stopped or paused SIPs and there might be further slowdown in SIPs inflows in the months to come.
AK Narayan, founder and CEO of AK Narayan Associates, said, “We are seeing some professionals who don’t have regular stream of income pausing their SIPs. However, regular investors have continued to invest through SIPs in equity funds.” He also added after the crash of equity markets in March, they are suggesting investors to continue to stay invested for few years and not redeem the money at loss.