Investor flows into equity MFs hit ~20k cr again in Nov

Equity mutual funds (MFs) saw net investor inflows of ~20,308 crore in November, despite weakness in the stock market.

This is the second time after August that equity schemes got monthly inflows in excess of ~20,000 crore. The average inflow for the previous four months was ~18,900 crore.

With this, total inflows for the year is ~1.36 lakh crore, highest yet in a calendar year. The total of equity assets is ~8.3 lakh crore or 37 per cent of assets under management (AUM) in the sector, which also rose to a record ~22.8 lakh crore at the end of November.

Overall AUM saw an increase of 6.5 per cent over the month.

Barring gilt schemes and gold funds, all other fund categories had inflows. Total inflows in the sector were ~1.26 lakh crore, led by liquid and money market funds which brought ~77,400 crore.

Sector executives say MFs as a product are establishing a strong connect with investors. Other factors such a lower rate of interest in bank deposits Jan Feb Mar Apr May Jun 2017 and a weak outlook in the other traditional investment avenues of gold and real estate are aiding the process.

According to Sundeep Sikka, chief executive at Reliance Nippon Life MF, it's the beginning of a strong wave for MFs, with investors increasingly accepting these as investment vehicles.

"India has a great potential and the industry has still a lot to do to reach out to more investors," he adds. "The good part is investors are realising the importance and potential of investment done through the SIP (Systematic Investment Plan) mode." Jul Aug Sep Oct Nov

Monthly SIP inflows are ~6,000 crore, with a little over 1.75 million accounts. This adds consistency and stickiness to the flows, beside giving stability to AUM.

Fund managers have no dearth of money in their hands to pump into the market. Over the past three years, they have put in ~2 lakh crore, a strong counterbalance to any withdrawal by foreign investors.

Rising participation in stocks through equity MF schemes, many believe, is a big structural change in India's capital market.

The sector says it would reach an AUM of about ~95 lakh crore by 2025, given the current pace.