Bundles of Indian one hundred rupee bills are pictured at a bank in Mumbai, India. (Photographer: Abhijit Bhatlekar/Bloomberg News)

Inflows Into Equity Mutual Funds Fall For Fourth Straight Month

Inflows into equity mutual funds, including equity-linked savings schemes, declined for the fourth straight month in August.

Total equity inflow fell 11.4 percent month-on-month to Rs 8,375 crore in August, according to data released by the Association of Mutual Funds in India. The mutual fund industry, however, witnessed a total inflow of Rs 1.74 lakh crore—the highest since 2011—compared with an outflow of over Rs 32,000 crore in July. The liquid/money market category contributed the most to the total inflow into mutual funds.

“It’s good to see net sales holding on in the positive zone,” said Swarup Mohanty, chief executive officer at Mirae Asset Global Investments (India) Pvt. Ltd. “One is particularly pleased to see the continued flow in the ELSS category. It speaks of the category now being accepted as the main tax savings avenue for investors.” Mohanty expects an increase in equity flows as the market broadens and the gap between the benchmark and fund returns narrows.

Aashish Somaiyaa, chief executive officer at Motilal Oswal Asset Management Company, however, said equity inflows after subtracting the new fund offer inflow doesn’t look enthusing. The balanced fund flow, he said, is massively negative after subtracting two new fund offers worth nearly Rs 4,500 crore.

Balanced fund inflows stood at Rs 2,630 crore in August compared with Rs 287 crore in July, the AMFI data showed.

“The month saw a shift from arbitrage-oriented funds to hybrid equity (erstwhile balanced). This indicates the blend of risk and return that customers are seeking,” said Sunil Subramaniam, chief executive officer at Sundaram Mutual Fund. “The general equity category sales saw a normal 16 percent growth but a sharp spike in redemptions of 35 percent because of profit-booking saw a 9 percent reduction in net sales.”

Also read: Equity Mutual Fund Monthly Inflows Fall For Longest Stretch In Two Years

Total assets under management rose 9 percent month-on-month to a record Rs 25.20 lakh crore in August. Total equity assets grew 4.2 percent to Rs 8.04 lakh crore during the period. Balanced fund assets rose 4 percent to Rs 1.87 lakh crore in August.