Equity MF inflows drop 62% in Q1 as Covid scares investors

MUMBAI: Investors pumped in Rs 11,710 crore into equity mutual funds during the thr ee months ended J une, a slump of 62% fr om the pr eceding quarter on account of market volatility and uncer tain ec onomic en vironment due to the COVID-19 pandemic.

The positive inflow pushed the asset base of equity mutual funds (MFs) to Rs 7.01 lakh crore by June-end from Rs 5.78 lakh crore a t t he end of M arch, data fr om the Association of Mutual Funds in India showed.

As per th e data, inflows in to equity and equity-linked schemes were at Rs 11,710 crore in the three months ended June, compar ed t o Rs 30,7 03 cr ore in the January-March quarter.

Investment into equit y-oriented schemes was a t Rs 17,670 cr ore in the April-June quarter 2019.

Industry experts said a drop in quarterly net flows into equity funds could be on account of market volatility and uncertain economic environment due to the COVID-19 pandemic.

Of Rs 11,710 crore investment in the June 2020 quar ter, the schemes a ttracted Rs 6,213 crore in April, Rs 5,256 crore i n Ma y an d R s 240.5 5 c rore i n June, w hich was the lowest i nvestment level in four years.

Morningstar India Associate Director (Mana ger R esearch) Himanshu Srivastava attributed the lower inflow in equity-orie nted funds i n J une to outflow from multi-cap and la rge-cap funds due to pr ofit-booking b y i nvestors, given the surge in markets in recent times.

Inflow thr ough Sy stematic In vestment Plans (SIP ) dropped to Rs 24,416 crore in the period under review compared to Rs 25,686 cr ore in the Mar ch quarter.

Moreover, in vestment th rough t he route fell below Rs 8,000 crore in June, making it the first suc h decline since November 2018.

Net investments through such route stood at Rs 7,927 crore in June, against Rs 8, 123 cr ore in Ma y and Rs 8,376 crore in April.

Experts said the slowdown in monthly SIP con tribution c ould be due to strain on cash f lows and incomes e xperienced b y se veral investors on account of the CO VID-19 situation.

They, further, said that once the economic situation impr oves, t he f lows should also pic k-up as S IP helps investors in r upee c ost ave r a ging and also in investing in a disciplined manner wit hout w orrying a bout mar ket volatility and timing the market.