At .₹ 12,622 cr, Oct Eq­uity MF In­flows High­est in FY19 So Far

NET IN­FLOWS in­creased by 35,500 crore; in­come funds con­tin­ued to see out­flows

The Economic Times - - Markets: Beating Volatility - Our Bureau

Mum­bai: Re­tail monthly flows into eq­uity-ori­ented mu­tual funds surged to the high­est this fi­nan­cial year driven by strong flows through sys­tem­atic in­vest­ment plans (SIPs). While liq­uid funds saw some flows trick­ling back af­ter the huge out­flow in the pre­vi­ous month, in­come funds con­tin­ued to wit­ness out­flows on higher in­ter­est rates and fears of the IL&FS cri­sis spilling over to the sec­tor.

Net in­flows in­creased by .₹ 35,500 crore to take the to­tal as­set un­der man­age­ment to .₹ 22.24 lakh crore.

Eq­uity funds saw in­flows of .₹ 12,622 crore, the high­est in the fi­nan­cial year, top­ping May’s in­flow of .₹ 11,350 crore. In­vestors pumped in .₹ 7,985 crore through SIPs in eq­uity funds, an all-time monthly high. This was .₹ 258 crore more than Septem­ber’s .₹ 7,727 crore, de­spite the sharp cor­rec­tion in the eq­uity mar­kets with the Nifty touch­ing the low­est point of 10,005 of this cal­en­dar year.

“In­vestors have used the cor­rec- tion in stock prices to add eq­uity in their port­fo­lio and in­crease their long-term al­lo­ca­tion to this as­set class,” said Swarup Mo­hanty, CEO, Mi­rae As­set Mu­tual Fund. Dis­trib­u­tors said eq­uity mu­tual funds saw strong in­flows from both metro as well as non­metro cen­tres. Given a mere 1.8 crore mu­tual fund in­vestors in In- dia, pen­e­tra­tion is likely to in­crease sharply as many new in­vestors en­ter eq­ui­ties, an as­set class that is known to beat in­fla­tion in the long-term, they added. The in­come fund cat­e­gory saw out­flows of .₹ 37,642 crore, while liq­uid funds saw in­flows of .₹ 55, 300 crore. In the pre­vi­ous month, in­come funds had seen out­flows of .₹ 32,500 crore, while liq­uid funds saw .₹ 1.5 lakh crore in out­flows.

While money is se­lec­tively trick­ling back to liq­uid funds and overnight funds of re­puted fund houses, in­vestors con­tinue to stay away from du­ra­tion funds. “Har­den­ing of in­ter­est rates is one rea­son why in­vestors are stay­ing away from in­come funds,” said NS Venkatesh, chief ex­ec­u­tive of­fi­cer of AMFI.

Cor­po­rate in­vestors con­tin­ued to be wary of debt mu­tual funds in the wake of the on­go­ing IL&FS cri­sis and the con­ta­gion ef­fect it could have. They con­tinue to closely mon­i­tor the de­vel­op­ments in the debt mar­kets. “Short- and medium-term debt funds have seen out­flows as fear of fail­ure was large,” says A Bala­sub­ra­ma­niam, CEO, Aditya Birla Sun­life Mu­tual Fund.

Of the .₹ 1.5 lakh crore out­flows in liq­uid funds in Septem­ber, only a third or .₹ 55,300 crore has come back. Due to this, many cor­po­rate in­vestors pre­ferred to play it safe and opted for bank de­posits rather than mu­tual funds.

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