Inflows Into Equity Mutual Funds Jump The Most In Three Months
Mutual fund net inflows in June rose 42 percent over the previous month—the biggest increase since March.
Inflows into equity mutual funds, including equity-linked schemes, jumped the most in three months in June as investors turned upbeat after Prime Minister Narendra Modi returned to power with a bigger majority.
Net inflows rose 42 percent over the previous month—the biggest increase since March—to Rs 7,663.13 crore in June, according to data released by the Association of Mutual Funds in India.
The inflows into equity schemes over the last two months, especially after the electoral verdict, has helped repose retail investors’ trust, NS Venkatesh, chief executive at AMFI, told BloombergQuint. “Political stability and lower inflation, coupled with the Reserve Bank’s stance to lower interest rates, is leading enhanced retail flows towards equity-oriented schemes.”
Contribution through systematic investment plans fell 1 percent month-on-month but remained above the Rs 8,000-crore mark.
“This is a definite sign of maturity and commitment to equity in the long term and this would really help them in their wealth creation process as the country embarks on its journey to become a $5-trillion economy,” said Swarup Mohanty, chief executive officer at Mirae Asset Global Investments (India) Pvt. Ltd.
Still, the overall mutual fund industry witnessed a net outflow of Rs 1.59 lakh crore across all schemes compared with an inflow of Rs 76,990 crore in May. While that’s the biggest outflow since September when IL&FS crisis triggered redemptions, bulk of the outflows in June came because of quarter-end withdrawals from money market schemes.
Investors pulled out more than Rs 1.5 lakh crore from money market schemes—used by companies to park surplus cash for the short term—in June. That, too, is the biggest monthly outflow from such schemes since September.
But liquid funds typically witness outflows on account of quarterly advance tax payments, according to Gajendra Kothari, managing director and CEO at Etica Wealth Management Pvt. Ltd.
AMFI’s Venkatesh said, “Although there has been outflows from liquid schemes, the flows into gilt and long-duration schemes are positive, owing to the RBI’s dovish stance on interest rates.”
Balanced Funds
The balanced funds category witnessed an outflow for the sixth straight month at Rs 1,909.66 crore. That’s the longest losing streak in at least a decade.
Assets Under Management
Total assets under management rose 1.5 percent month-on-month to Rs 25.81 lakh crore in June. Total equity assets gained 3 percent to Rs 7.19 lakh crore during the period.