Inflows Into Equity Mutual Funds Fall Most Since March

Inflows into equity mutual funds, including equity-linked savings schemes, fell the most in seven months due to increased market volatility, global trade war tensions and uncertainty over the upcoming state elections.

Equity inflows fell by nearly 33 percent over the previous month to Rs 8,414 crore in November, according to data released by the Association of Mutual Funds in India. Overall across all schemes, the mutual fund industry witnessed a total inflow of Rs 1.42 lakh crore compared with Rs 35,529 crore in October.

“Equity inflows have slowed down significantly. Systematic Investment Plan inflows for the month at close to Rs 8,000 crore have held up but new inflows have been slowing due to the weak market sentiment,” said Aashish Sommaiyaa, chief executive officer of Motilal Oswal AMC. “Inflows are directly correlated to the market performance and the last couple of months have been difficult for the markets.”

‘Liquidity Crunch Fears Abate’

The liquid or money-market category—used by companies to park surplus cash in the short term—contributed the most to inflows. It rose for the second consecutive month to Rs 1.36 lakh crore, up by nearly two-and-half times.

Fears of a liquidity crunch have largely abated and investors are realising that and coming back, said NS Venkatesh, chief executive officer of AMFI. “The monetary policy is also dovish with inflation expectations lowered.”

Outflows from income schemes fell 83 percent sequentially to a seven-month low of Rs 6,518 crore. Such schemes are considered safer because they invest in high-dividend generating stocks, government securities, certificates of deposits, corporate bonds and money-market instruments. Balanced fund inflows fell for the third consecutive month to Rs 215 crore against Rs 519 crore in October.

Total assets under management rose 8 percent to Rs 24.03 lakh crore in November. Total equity assets rose for the first time in three months to Rs 7.71 lakh crore during the period.