Equity inflows at 2-year low
The mutual fund (MF) industry witnessed deceleration in equity inflows for the third straight month in January.
Inflows into equity schemes, which include tax-saving schemes, stood at ~6,158 crore last month.
This was the lowest since the ~6,462 crore recorded in February 2017. Equity inflows in January 2019 were 42 per cent lower than the last 12-month average of ~10,594 crore.
Market players say volatility in the broader market and sharp sell-off in indebted companies could have hurt investor sentiment. “The monthly data shows there are reasons to be worried on the equity side. Of the ~6,000 crore of equity flows, the data shows ~2,000 crore has come through new fund offers. After the rationalisation of schemes, there is a limit on the number of schemes that can be launched each month,” said Aashish Somaiyaa, managing director and chief executive officer, Motilal Oswal MF.
Another disappointing trend was outflows from balanced schemes. According to the data released by the Association of Mutual Funds in India (Amfi), the category saw the first month of outflow since May 2014. The outflow stood at ~952 crore in January.
However, there were some positives in the monthly numbers. The income category, which has been hit owing to volatility and credit events in debt markets, saw an inflow of ~2,080 crore after eight months of outflows on the trot.
Market participants expect the flows to improve on the debt side.
“With the RBI easing the rates, we expect inflows to rise in the coming weeks,” said N S Venkatesh, chief executive officer, Amfi.
Investors sinking lump sum money in equities seem to have applied the brakes, but inflows through systematic investment plans (SIPs) continued to grow at a good clip
SIPs in January stood at ~8,063 crore, marginally high compared to the previous month.
“Despite acute market volatility owing to credit events and global uncertainty, retail Investors continue to repose their faith in the India growth story. This is evident from the SIP flows and folio numbers, which continue to rise sequentially,” Venkatesh added.
The mutual fund industry saw an inflow of ~65,439 crore as against an outflow of ~1.36 trillion seen in December.
Inflows into the liquid fund category stood at ~58,637 crore, which pushed up the overall tally for the industry.
The broader market conditions remained weak in January even as the benchmark indices found support from a select set of companies.
The Nifty Midcap 100 was down 5.43 per cent, while the Nifty smallcap 100 was down 4.9 per cent during the month. Meanwhile, the BSE Sensex was up 0.52 per cent, while the Nifty 50 saw a marginal fall of 0.29 per cent during the month.
Assets under management (AUMs) for the industry stood at ~23.4 trillion in January compared to ~22.9 trillion at the end of the previous month. Total equity AUM dipped marginally to ~7.74 trillion.