Equity MF inflows slide 78% from the year’s peak | The Financial Express

Equity MF inflows slide 78% from the year’s peak

The benchmark indices were up 3.4% in August.

Equity MF inflows slide 78% from the year’s peak
Inflows dipped 31% month-on-month to Rs 6,119 crore in August as investors chose to book profits amid a rally in benchmark indices.

By Ashley Coutinho

Inflows into equity mutual fund schemes have declined for the third straight month and are down 78% from this year’s peak of Rs 28,463 crore seen in March, data from the Association of Mutual Funds in India (Amfi) showed.

Inflows dipped 31% month-on-month to Rs 6,119 crore in August as investors chose to book profits amid a rally in benchmark indices.

“The market rally in August and rich valuations prompted wealthy investors to take a tactical call and book profits. Gross sales and monthly SIP flows, however, continue to be robust,” said G Pradeepkumar, chief executive officer, Union AMC.

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Categories such as large & mid-cap, mid-cap and small-cap funds saw inflows of over Rs 1,000 crore, while flexi cap funds saw inflows of over Rs 2,000 crore. Sectoral and thematic funds saw outflows of over Rs 1,000 crore.

“Investors continued to take a cautious approach this month and money is temporarily shifting from equity to debt considering the rising interest rate scenario,” added Priya Agrawal, Money Coach, LXME.

The benchmark indices were up 3.4% in August. Equity schemes have now seen inflows for eighteen consecutive months.

August saw multiple fund launches, including names such as Quant Large Cap Fund, IDFC Midcap Fund, Edelweiss Focused Equity Fund Baroda BNP Paribas Flexi Cap Fund and WOC Flexi Cap Fund.

Also Read: Large, Mid, Small, Multi or Flexi Cap MFs – which scheme had the highest AUM in July?

The SIP book remained healthy and rose 4.5% to Rs 12,693 crore in August, an all-time high. The number of SIP accounts (5.71 crore), SIP AUM (Rs 6.4 trillion) MF folios (13.64 crore), retail MF folios (10.89 crore) and net AUMs under retail equity schemes (Rs 20.1 trillion) all stood at an all-time high as on August 31, 2022.

NS Venkatesh, chief executive at Amfi, said, “Monthly SIP contribution, SIP AUM, SIP folios, overall mutual fund folios and AUMs, all at an all-time high coupled with continued positive flows in most categories of mutual fund schemes, signify rising and informed investment preference towards MFs as an asset class. Investors continue to stay fully invested and adhere to goal-based investing.”

In the hybrid fund category, arbitrage funds – which aim to generate profits by exploiting price differences of the same underlying assets in different segments – saw net outflows of Rs 8,548 crore.

Debt-oriented funds witnessed net inflow of Rs 49,164 crore in August, compared with the previous month’s inflow of Rs 4,930 crore. Liquid funds saw a significant inflow of Rs 50,095 crore in this category, followed by ultra-short duration funds and Money Market Fund.

Experts attribute the flows to rising interest rates and uncertainty related to further rate hikes.

“Investors have been parking their money in short-term debt instruments as they are likely to earn a higher rate of interest as compared to other traditional investments like a fixed deposit. Moreover, short term instruments offer the flexibility to move into equity or invest in other instruments in a staggered manner. A lot of companies and investors could also be parking their money in short-term funds in preparation for making advance tax payments in September,” said Kavitha Krishnan, senior analyst – Manager Research, Morningstar India.

Net AUM for the industry stood at Rs 39.3 trillion as on August 31, 2022, a 7% y-o-y growth and an all-time high.

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