Inflows in equity schemes gain traction in September | The Financial Express

Inflows in equity schemes gain traction in September

Equity schemes have now seen inflows for 19 consecutive months.

Inflows in equity schemes gain traction in September
Benchmark indices were down 3.5% in September.

Equity mutual fund schemes saw robust inflows in September after registering three straight months of decline as investors flocked to the schemes amid a market fall. Inflows for the month stood at Rs 14,099 crore, 130% higher than the previous month but 10% lower than the average for the year.

Benchmark indices were down 3.5% in September. Equity schemes have now seen inflows for 19 consecutive months.

Within the equity-oriented category, most inflows were seen in sectoral/ thematic funds (Rs 4,419 crore) followed by flexi-cap funds (Rs 2,401 crore) and mid-cap funds (Rs 2,151 crore). The industry has witnessed multiple fund launches during the month, especially within the thematic sector funds. Other categories that witnessed new fund launches include the mid-cap and the flexi-cap segments.

Akhil Chaturvedi, chief business officer, Motilal Oswal Asset Management, said: “Healthy growth in net equity inflows after two months of below average trend augurs well for the markets. Indian investors have reposed faith in the domestic economy and markets despite market volatility and negative trends globally. Investors have noticed that India has managed its affairs well relative to global peers and domestic buying support for equity has also helped mitigate FPI outflows. We expect this healthy trend in net equity inflows to sustain going forward.”

Monthly SIP contribution grew 2.2% m-o-m to Rs 12,976 crore in September, the highest ever. Number of SIP accounts stood at 58.3 million. Mutual fund folios and retail MF folios crossed all-time high at 138 million and 109 million, respectively.

“In the last few months markets reacted to inflationary factors and events like rate hikes. However, small investors have shown consistent faith in mutual fund investments. They see SIP as wealth accumulation and wealth creation over a longer term. Investors must stay focused on their goals and continue to invest in mutual funds and not lose the opportunity,” said NS Venkatesh, chief executive of Association of Mutual Funds in India (AMFI).

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September witnessed another rate hike by the US Federal Reserve in an attempt to bring inflation under control. Expectations around a global slowdown likely led to a significant sell-off from foreign investors during the month.

“Despite this, a falling rupee and the increased pressure on earnings, domestic investors continued to invest in the markets, leading to positive flows during the month. This is likely indicative of investors’ preference for investing during market dips and in NFOs,” said Kavitha Krishnan, senior analyst – manager research, Morningstar India.

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 over Rs 4,000 crore.

Debt-oriented funds witnessed net outflows of over Rs 65,000 crore in September, compared with the previous month’s inflow of `49,164 crore. Liquid funds saw outflow of Rs 59,970 crore in this category, followed by money market funds and ultra-short duration funds. Experts attribute the quarterly outflows to the advance tax payment obligations of corporates.

“In the high inflationary scenario, RBI has been increasing the repo rate to tame inflation down, due to which the debt market is likely to be volatile. As the festive season is coming, people need liquidity, which might have affected the increase in outflows,” said Priya Agrawal, money coach, LXME.

Net AUM for the industry stood at Rs 38.42 trillion as on September 30, 2.2% lower than that in the previous month.

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First published on: 11-10-2022 at 03:00 IST