Net inflows into equity MFS at 5-month high

INVESTORS BET ON SMALLER STOCKS BASED ON CHEAPER VALUATIONS FOLLOWING CORRECTIONS IN 2019

MUMBAI: Net inflows into equity mutual funds (MFS) were at a five-month high at ₹7,934 crore in January, up about 73% from December and 28.84% more than the same period last year, according to data released on Monday by the Association of Mutual Funds in India (Amfi).

Equity mutual funds have seen steady inflows for the last two months. Retail monthly systematic investment plan (SIP) contribution was at an all-time high at ₹8,532 crore. Equity MF redemptions also softened to ₹13,440.65 crore in January, against the previous month’s ₹15,441.78 crore.

As fund managers pumped hefty sums into small and midcap stocks, inflows into equity MF schemes rose in January even as the benchmark Sensex was down nearly 1% in the period.

Investors bet on smaller stocks based on cheaper valuations following steep corrections in 2019. Inflows into midcap schemes jumped 125.87% in a month to ₹1,798.16 crore in January—the highest in at least 10 months.amfi started releasing category-wise data only in April 2019. Small-cap schemes saw the highest inflow in five months in January, up 154.41% at ₹1,072.68 crore. Abundant liquidity drove BSE Midcap and BSE Smallcap indices up 3.3% and 7.07% respectively in January. In 2019, BSE Midcap lost 3.05% and BSE Smallcap fell 6.85%. Small- and mid-caps more than doubled their inflows in a month, indicating investor willingness to look at categories that have had substantial price correction, according to Vishal Kapoor, CEO, IDFC AMC.

“While small-cap funds have not been the flavour, the recent market rally seems to have driven the inflows into small and mid-cap funds. As a result, the small cap asset under management (AUM) has also seen the biggest jump in the last nine months,” said Sundeep Sikka, executive director and CEO, Nippon Life India Asset Management Ltd.

Meanwhile, redemptions into equity MFS also narrowed steadily in the last three months.

Equity mutual fund schemes saw redemptions worth ₹13,440.65 in January, against ₹15,441.78 crore in December and ₹11,397 crore in January 2019.

The total amount from SIPS in January was a record ₹8,531.90 crore. SIPS allow people to invest fixed amounts in mutual fund schemes at fixed intervals.

“Mutual fund industry AUM is at an all-time high at ₹28.18 lakh crore driven by positive flows in all categories of open-ended schemes and growing retail monthly SIP contribution. We expect this positive growth momentum in mutual fund AUM to continue, driven by growthoriented budget and the RBI stance on continuing benign interest rate cycle, resulting in 15-20% growth for the mutual fund industry this fiscal,” said NS Venkatesh, CEO, Amfi.