Net inflows into the equity-oriented schemes of mutual funds in December were second lowest in the current financial year at Rs 4,499.39 crore. Despite slowing of flows into equity funds, systematic investment plans (SIPs) inflows have continued to remain robust at Rs 8,518.47 crore in December. Market participants say that with lump-sum investments going down in the last few months, SIPs are acting as a cushion to equity flows. Overall, in December 2019, while the mutual fund industry saw outflows of Rs 61,809.70 crore, assets under management (AUM) of the industry stood at Rs 26.54 lakh crore. The outflows were largely due to withdrawal of money from liquid funds.
In November 2019, equity schemes had seen net inflows of Rs 1,311.65 crore, the lowest levels since June 2016. The data from the Association of Mutual Funds in India (Amfi) shows that while net inflows into equity funds between April and December 2019 stood at Rs 53,391 crore, inflows through SIPs were at Rs 74,398 crore.
Jimmy Patel, MD and CEO at Quantum Asset Management Company (AMC), said, “With the slowing of flows, SIPs are helping equity funds tide over lower inflows. Inflows into equity funds have come down because funds have not beaten the benchmark in the long term.”
He also added that in the months to come, inflows through lump-sum in the equity funds look difficult as growth boosters are missing.
The Amfi data also showed that large-cap funds and focused funds were the categories which saw higher net inflows at Rs 1,134.80 crore and Rs 1,837.37 crore, respectively, in December G Pradeepkumar, CEO, Union Asset Management Company, said, “Large-cap funds continue to attract money aided by the positive performance of large-cap stocks and indices. Having said that, right now, there is a rally only in large-cap index and not much in the mid-cap and small-cap indices. Once we see rally in broader markets, inflows will also come to the other categories of the funds.”
In the last one year, while returns of the Sensex have been 13.44%, BSE Mid-cap index and BSE Small-cap index have given negative returns of 1.67% and 5.13%, respectively. Net inflows into mid-cap stood at Rs 796.08 crore and for small-cap funds, it stood at Rs 421.63 crore in December. Market participants also say that inflows in December also improved because of a few new fund offers (NFOs) as equity-oriented funds mobilised Rs 2,179 crore through five NFOs. The Amfi data also showed that in December, other exchange-traded funds (ETFs) saw inflows of Rs 12,673.50 crore.
The open-ended debt schemes saw large outflows to the tune of Rs 78,426.83 crore, led by liquid funds. In December, the data showed liquid funds saw outflows of Rs 71,158.51 crore. Moreover, overnight funds and money market funds also saw outflows of Rs 8,868.63 crore and Rs 3,005.61 crore, respectively. Market participants say that outflows from liquid funds resulted from institutional investors like banks and corporates redeeming their investments to pay advance tax. Overall, while the mutual fund industry saw outflows of Rs 61,809.70 crore in December, the industry’s AUM stood at Rs 26.54 lakh crore.