March Mutual Fund inflow: Did the change in NAV applicability rule contribute to the spike?

By: |
April 09, 2021 8:12 PM

The total money inflow in MF schemes though SIPs has spiked in March 2021 to touch Rs 9,182 crore in comparison to total SIP inflow of Rs 7,528 crore in February 2021.

Mutual Fund, MF, MF inflow, Systematic Investment Plan, SIP, SIP inflow, net MF inflow, equity funds, debt funds, NAV applicabilityAfter witnessing net outflow in equity schemes for 8 straight months since July 2020, equity schemes have seen a robust net inflow of Rs 9,115 crore in March 2021.

The total money inflow in Mutual Fund (MF) schemes though Systematic Investment Plans (SIPs) has spiked in March 2021 to touch Rs 9,182 crore in comparison to total SIP inflow of Rs 7,528 crore in February 2021. The robust SIP inflow of Rs 9,182 crore in March 2021 was the highest ever SIP inflow, surpassing the previous highest figure of Rs 8,641 crore achieved in March 2020.

More importantly, after witnessing net outflow in equity schemes for 8 straight months since July 2020, equity schemes have seen a robust net inflow of Rs 9,115 crore in March 2021, while the net outflow in February 2021 was Rs 4,534.36 crore.

“This is heartening to see as it comes after a terrible 6 months earlier where outflows were very large,” said Gopal Kavalireddi, Head of Research at FYERS.

Explaining the change in the investment pattern, Kavalireddi said, “With stock markets close to all-time highs and investors probably unsure of where to invest, have restarted their SIPs, ploughing the gains of the last one year. With buoyant stock markets, we can only hope that the positive trend in equity flows is not a one-month/year ending aberration but a return of investors to mutual funds and long-term investing.”

“Debt funds on the other hand saw an outflow of Rs 52,528 crore in comparison to an inflow of Rs 1,734.63 crore in the previous month, owing to advance tax payments and other year ending commitments. The AUM at the end of March stood at Rs 31.42 lakh crore,” he added.

Some MF industry stakeholders, however, believe that the enforcement of the rule on February 1, 2021 that mandates allotment of MF units at the NAV according to the date and time of realisation of fund may have some contribution in the robust SIP inflow figure of Rs 9,182 crore achieved in March.

Mutual Fund Investment: You may not get MF units at desired NAV even if applied before cut off time

This is because banks were closed on February 27 (4th Saturday) and February 28 (Sunday). So, units were allotted on March 1, 2021 against all the investment money realised after 3 pm on February 26, 2021.

As a result, investments made through cheques even on February 24 – February 25, 2021 may have reflected in the inflows of March 21, further boosting the inflow figure to touch the highest ever SIP inflow of Rs 9,182 crore.

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