Equity mutual fund inflows plunge sharply to Rs 8,700 crore in August

NEW DELHI: Inflows to new fund offers (NFO) continued in August, supporting the net inflow to mutual fund schemes. However, the deposit was far less than the previous month.

Amfi data released for the month of August said investors poured in a net Rs 8,666.68 crore in equity mutual fund schemes against previous month’s deposit of Rs 22,583.52 crore. Equity mutual funds saw a total inflow of Rs 33,668.76 crore and outflow of Rs 25,002.08 crore.

Flexicap funds saw the biggest inflow at Rs 4,741.22 crore, while focussed funds drew investments of more than Rs 3,000 crore. Sectoral and thematic funds were also in demand during the month, getting inflow of more than 1,000 crore. ELSS and value funds were among those that saw outflows.

NFOs across categories mobilised Rs 23,668 crore in August, the data showed. NS Venkatesh, Chief Executive of Amfi said he expects more NFOs in the coming months.

SIP inflows in August rose to Rs 9923.15 crore from Rs 9608.86 crore in the previous month. Total number of SIP folios saw a marginal jump to 4.32 crore from 4.17 crore. The assets under management (AUM) from SIPs rose to an all time high of Rs 5.26 lakh crore, from 5.03 lakh crore in July.

“Last month saw the highest ever flows into equity funds as lower interest rates on traditional investments and a rising equity market seems to have encouraged a lot of investors to turn towards mutual funds,” said Kavitha Krishnan, Senior Analyst Manager Research, Morningstar India.

“Although this trend continued into the month of August, the magnitude of flows has been lower in comparison. Record flows into NFOs combined with a stable SIP book have largely contributed to the flows.”

Thanks to the drop in net inflows, domestic institutional investors, which mostly comprise mutual fund managers, bought a net Rs 6,894.7 crore worth of stocks, against Rs 18,394.2 crore for the previou month. FIIs were net buyers in Ausust and invested Rs 2,083 crore in the equity markets, as per NSDL data.

Debt mutual fund schemes also saw net inflows worth Rs 1,074.44 compared to Rs 73,694.04 crore in July. Floater funds attracted the largest chunk of investment followed by corporate bond funds. Overnight and low duration funds saw big withdrawals.

“August month saw continued flows in floating rate category in fixed income with net sales of nearly Rs 10,000 crore. Anticipation of tighter liquidity conditions due to RBI announcement of additional VRRR could have prompted this move,” said Lakshmi Iyer, Chief Investment Officer (Debt), Kotak Mahindra AMC.

“Categories like medium to long term, gilt etc. also saw positive net sales as the steep yield curve offers cushion to any potential abrupt rise in rates,” she added.

The total mutual fund AUM as on August 31 rose to an all-time high level of Rs 36,59,445.04 crore, thanks to net inflow of Rs 32,976.21 crore. Mark to market gains also supported the AUM rise. BSE Sensex climbed 9.44 per cent during August, while BSE Midcap advanced 3.32 per cent and BSE Smallcap added 0.50 per cent.

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