By Ashley Coutinho
Inflows into equity mutual fund schemes dipped 43% to Rs 8,898 crore in July as investors chose to book profits amid a rally in benchmark indices.
This was the seventeenth straight month of inflows. However, inflows have declined for the third straight month, data from the Association of Mutual Funds in India (Amfi) showed.
The net inflows in April were Rs 15,890 crore, Rs 18,529 crore in May while June saw inflows of Rs 15,495 crore.
All the equity-oriented categories received net inflows in July with the small cap fund category being the biggest beneficiary with net inflows of Rs 1,780 crore. This was followed by the flexi-cap fund which witnessed Rs 1,381 crore net infusion. Besides, large-cap, large- & mid-cap and mid -cap fund witnessed over Rs 1,000 crore net inflow each.
“Investors have taken some profits,” said Akhil Chaturvedi, chief business officer, Motilal Oswal AMC. “Excluding SIP numbers, we might have witnessed actual net negative sales in July. Even the hybrid category has slowed down with both dip on gross sales and higher redemptions.”
The surge in the market, particularly in the latter half of July, and the recent uptick in FPI flows may bolster the confidence of retail investors and boost inflows in August, said market watchers.
The benchmark indices have risen 14.5% since June 17.
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The SIP book remains healthy but saw a marginal dip of 1% to Rs 12,140 crore in July. The number of SIP accounts stood at an all-time high of 5.61 crore. MF folios stood at 13.55 crore and retail folios inched up to 10.80 crore, also an all-time high.
“Continued retail investor interest, as reflected in all-time SIP AUMs, crossing the Rs 6-trillion milestone for the first time ever, and also continued monthly SIP contribution of over Rs 12,000 crore, reinforces mutual funds as a preferred investment avenue. Positive flows in almost all categories of schemes barring hybrid funds, stand in good stead as the pace of economic recovery quickens in the next few quarter,” said NS Venkatesh, chief executive, Amfi.
Experts said that the SIP book is expected to remain robust this year despite market volatility.
“The dip in Nifty to 15,200 levels was difficult to digest for a lot of retail investors, which is why the subsequent rally was used as an opportunity to book profits. We have see higher inflows in August given the recent surge although I do not see a runaway rally any time soon,” said Kirtan Shah, founder and CEO at Credence Wealth Advisors.
The hybrid category saw outflows in July largely because of net outflows to the tune of Rs 6,407 crore in arbitrage schemes. Experts suggest that some of this money may have moved to debt funds.
“With better YTMs (yield to maturity) in the low duration funds, equity taxation in the arbitrage category is no longer enticing to investors,” said Akshat Garg, manager- research, Choice Wealth.
Credit risk funds witnessed outflows for the eighth straight month in July despite average one-year category returns of 15%.
The net assets under management of the industry stood at Rs 37.74 trillion in July, up 5.9% from Rs 35.64 trillion in the previous month.