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Equity MFs inflow hit 5-month low of Rs 5,256 cr in May

June 08, 2020 20:21 IST

The assets under management of the 44-players mutual fund industry stood at Rs 24.55 lakh crore in May-end from Rs 23.93 lakh crore in April-end.


Illustration: Dominic Xavier/

Inflows into equity mutual funds dropped to five months low of Rs 5,256 crore in May amid uncertain economic environment due to coronavirus pandemic.

Overall, the mutual fund industry witnessed a net inflow of Rs 70,813 crore across all segments, last month data by Association of Mutual Funds in India showed on Friday.


In comparison, an inflow of Rs 45,999 crore was seen in April.

As per the data, inflows into equity and equity-linked open ended schemes was at Rs 5,256 crore, while an outflow of Rs 211 crore was seen from close ended funds.

In April, such schemes attracted a net infusion of Rs 6,213 crore.

Prior to this, equity schemes saw an investment Rs 11,723 crore in March, Rs 10,796 crore in February, Rs 7,877 crore in January and Rs 4,499 crore in December.

“Inflows into equity funds, while lower than previous months continue to remain positive largely driven by SIP inflows.

“Investors continue to prefer large and multi cap funds given the market volatility and uncertain economic environment due to the COVID-19 pandemic," said Kaustubh Belapurkar, director at manager research, Morningstar India.

Almost all the equity-oriented mutual fund categories registered net inflows last month.

Large-cap, multi-cap, ELSS (equity linked saving schemes), and large cap & mid-cap saw inflows of Rs 1,556 crore, Rs 758 crore and Rs 737 crore and Rs 712 crore respectively during the month under review.

The positive inflow in equity schemes could be attributed to steady flow of Rs 8,123 crore through systematic investment plan (SIP) route.

The SIP monthly contributions have breached the Rs 8,000 crore mark for the 18th consecutive month.

"Despite economic uncertainty and market volatility, Investors showing matured investment behaviour continue to repose confidence in equity mutual funds, reflected by robust monthly SIP contribution," Amfi CEO NS Venkatesh said.

Echoing similar views, Harsh Jain, co-founder of Groww, said that Indian SIP investors are showing immense resilience to market ups and downs. Clearly SIP as a medium using which investors should invest has gained immense popularity.

"Despite the past lockdown, the investments via SIP remains more or less in the same range as the entire year before at Rs 8,123 crore this month. In FY20, monthly SIP flows had remained in this zone of around Rs 8,100-8,600 crore," he added.

In addition, mutual funds focussed on investing in fixed-income securities saw a net inflow of Rs 63,665 crore last month as compared to Rs 43,431 crore in April.

Venkatesh said that investors are taking advantage of conducive interest rates trend.

Besides, shift towards high quality AAA rated has resulted in steady rise in the net flows in debt schemes.

"RBI's measures to deal with the trouble in a few debt funds have shown clear success in instilling confidence in investors as investments in debt funds this month are back to levels similar to before," Jain said.

Among fixed-income securities, overnight funds witnessed a pull out of Rs 15,881 crore.

Credit risk funds saw a lower withdrawal of Rs 5,173 crore in the period under review as compared to Rs 19,239 crore in April.

"Credit Risk concerns have ebbed, following regulatory support, redemptions have come down and we would see investors allocating higher quantum of savings to high quality debt paper," Venkatesh added.

Besides, gold ETFs too saw an inflow of Rs 815 crore last month, higher than Rs 731 crore witnessed in April.

The assets under management of the 44-players mutual fund industry stood at Rs 24.55 lakh crore in May-end from Rs 23.93 lakh crore in April-end.

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