Inflows into equity MFs halve in Oct

Even as the benchmark Sensex hit record highs in October, inflows into equity mutual funds declined. Data released by the Association of Mutual Funds of India (Amfi) on Friday showed net inflows into equity mutual fund schemes were at ₹6,037.78 crore in October, down 52.16% from ₹12,622 crore in same month last year. On a monthly basis, inflows into equity mutual funds were down 10.25% from ₹6,728.02 crore in September.

Redemption in equity mutual fund schemes also increased in October. According to Amfi, ₹11,025.26 crore was redeemed, compared to ₹9,334.3 crore in September, and ₹10,183 crore in October 2018.

The Sensex gained 3.78% in October, its best monthly performance this financial year, while the Nifty gained 3.51%.

According to G Pradeepkumar, chief executive, Union Asset Management Company, the net flows were lower primarily because of market volatility.

“While the index went up significantly in October investors were probably concerned with the underlying volatility. However, encouraging signs are that the SIP flows remained robust, which augurs very well for the market and the mutual fund industry.”

In October, inflows to systematic investment plans (SIPs) saw a marginal decline at ₹8,246 crore, from ₹8,262.94 crore in September. SIPs allow people to invest a fixed amount in a mutual fund scheme periodically at fixed intervals.

Pradeepkumar added that while the flows may remain subdued in the short term they are expected to pick up in the next three to six months.

Investor sentiment had improved after a slew of fiscal stimulus measures by the Centre. However, after rating agency Moody’s lowered India’s outlook to negative from stable on Friday, it may have an adverse impact on liquidity, especially funds that are backed by foreign institutional investors (FIIs).

Domestic institutional investors (DIIs), who include mutual funds and insurance companies, invested ₹4,675.37 crore in Indian shares in October, much lower than the ₹12,490.81 crore in September.

FIIs bought Indian shares worth $2.06 billion in October higher than last month’s $954.62 million.