Mutual Fund Inflows Tumbled By More Than Half In November, AMFI Data Shows

Inflows into mutual funds declined by more than half in November as investors ploughed in less money into liquid schemes because of exit load, and investments into equity schemes tumbled to lowest in more than three years.

Net inflows into liquid funds—used by companies to park surplus cash for the short term—plunged 92 percent over the preceding month to Rs 6,938 crore in November, according to data released by the Association of Mutual Funds in India. That came as the market regulator, starting Oct. 20, imposed an exit load on investors withdrawing funds within seven days of their investment.

Investments in equity mutual funds, too, fell to the lowest in more than three years even as Indian stocks rallied to hit fresh record highs, trade tensions between the U.S. and China eased and foreign investors turned buyers.

Net inflows into equity and equity-linked schemes tumbled 78 percent over the previous month to Rs 1,311.65 crore in November, AMFI data showed. That’s the third straight month of decline and the lowest since June 2016 when equity inflows had fallen to Rs 320 crore.

The decline in equity mutual funds was mostly led by a sharp fall in inflows into multi-cap funds and a Rs 1,844.72-crore outflow in three equity-oriented schemes—sector/thematic funds, value/contra funds, and large and midcap funds.

AMFI started offering granular data of equity inflows since April, according to the guidelines of the market regulator.

A decline in investments in equity and liquid funds brought down the net overall inflows into the mutual fund industry by 60 percent month-on-month to Rs 54,419.18 crore.

“Goal-based, long-term SIP investments from retail investors continue to grow steadily, with SIP AUM at an all-time high of Rs 3.12 lakh crore,” NS Venkatesh, chief executive officer at AMFI, said. “While equity net inflows have come down sharply in November, partly due to investors booking profits, the overall mutual fund industry AUM reached an all-time high of Rs 27 Lakh crore.”

Contribution through systematic investment plans, or SIPs, remained steady for the fourth straight month, the data showed.

“It’s heartening to see the industry add over 5 lakh SIP accounts in November, the highest so far this year, which is a strong testament to the continued value retail investors see in building investments through SIPs,” said Vishal Kapoor, CEO at IDFC Asset Management Company. In the fixed income space, investors continue to favour high-quality portfolios in short term, with strong growth being registered in banking & PSU and corporate bond categories, he told BloombergQuint. Also, the arbitrage fund category continues to find favour, especially with high net worth individuals looking for steady net returns.

Total assets under management stood at Rs 26.94 lakh crore in November compared with Rs 26.13 lakh crore in October. Total equity assets rose 4.2 percent month-on-month to Rs 7.56 lakh crore during the period.