However, investors pulled out Rs 52,528 crore from debt mutual funds last month, after investing Rs 1,735 crore in February, owing to advance tax payments and other year ending commitments.
Overall, the mutual fund industry witnessed a net outflow of Rs 29,745 crore across all segments during the period under review, compared with a net inflow of Rs 4,090 crore in February.
According to the data, net inflow in equity and equity-linked open-ended schemes was at Rs 9,115 crore in March, compared with an outflow of Rs 4,534 crore in February.
Prior to this inflow, equity schemes had been witnessing a net outflow since July 2020.
“Net flows were witnessed across equity fund categories in March.
“While it is too early to make any conclusions, it seems like equity investors waiting on the sidelines for a market correction, have started making allocations taking a long-term investing view on equities, as should be the case,” Morningstar India Director (Manager Research) Kaustubh Belapurkar said.
Additionally, the quantum of redemptions was lower for the month, suggesting that profit booking and reallocation to other asset classes slowed down, he added.
Within the equity category, thematic funds, led by ESG (environmental, social and governance), received the highest inflow to the tune of Rs 2,009 crore. It was followed by tax-saving ELSS funds that saw a net investment of Rs 1,552 crore, mid-cap funds saw an inflow of Rs 1,502 crore and flexi-cap funds witnessed a net buying of Rs 1,386 crore.
“It seems that retail investors are getting used to the new valuations and are comfortable putting money back in equities,” Gautam Kalia, head (investment solutions) at Sharekhan by BNP Paribas, said.
“We saw an increase in flows to hybrid funds but clearly, now, many clients are moving back into equity funds. For obvious reasons, ELSS investments were high in March,” he added.
Also, SIP (Systematic Investment Plan) collection increased to Rs 9,182 crore in March, from Rs 7,528 crore in the preceding month.
This is the highest SIP inflow ever, surpassing the previous tally of Rs 8,641 crore seen in March 2020.
Amfi Chief Executive N S Venkatesh attributed the sharp increase in the SIP inflow to the inclusion of about Rs 500 crore February numbers in March’s data, as the last two days of February were holidays.
“With stock markets close to all-time highs and investors probably unsure of where to invest, have restarted their SIPs, ploughing the gains of last one year,” Gopal Kavalireddi, head (research) at FYERS,? said.
He further said that with buoyant stock markets, “we can only hope that the positive trend in equity flows is not a one-month or year-ending aberration but a return of investors to mutual funds and long-term investing”.
Apart from equities, gold exchange-traded funds witnessed a total net inflow of Rs 662 crore last month, compared with Rs 491 crore in February.
The asset under management of the mutual fund industry was at Rs 31.43 lakh crore in March-end, from Rs 31.64 lakh crore in February-end.