Equity MF inflows dip 44% as investors turn cautious

Suresh P. Iyengar | | Updated on: May 10, 2022

Rising interest rate amid high inflation to hit corporate earnings; SIP contributions down 4%

Inflows into equity funds dipped 44 per cent to ₹15,890 crore against ₹28,463 crore logged in March despite thematic new fund offer of ICICI Mutual Fund collecting ₹3,130 crore. This is the lowest inflow in three months.

The NFO of ICICI MF had opened for subscription before the regulator SEBI stopped mutual funds from launching new offers for six months in April to meet the regulatory guidelines.

Despite the volatile market, all the equity schemes saw a positive inflow with thematic fund recording the highest inflow of ₹3,815 crore (₹307 crore) followed by large and mid-cap fund receiving investment of ₹2,050 crore (₹3,165 crore), while small and flexi cap funds attracted inflows of ₹1,717 crore (₹1,696 crore) and ₹1,709 crore (₹2,549 crore), according to the Association of Mutual Funds in India (AMFI) data.

Arbitrage and Balanced advantage funds saw an inflow of ₹4,092 crore (outflow of ₹6,797 crore) and ₹1,543 crore (₹1,719 crore).

Given the turbulent equity market, other and index ETFs recorded an inflow of ₹8,663 crore (₹6,907 crore) and ₹6,062 crore (₹12,313 crore), while gold ETF saw an inflow of ₹1,100 crore (₹205 crore).

Investor sentiment

Himanshu Srivastava, Associate Director, Morningstar India, said lower inflow in equity was due to investors turning cautious given the ongoing challenges to the investment environment. Geopolitical tension due to the raging war between Russia and Ukraine, concerns over the surging crude prices and uptick in domestic inflation continued to haunt the markets, he added.

Inflows through systematic investment plan was down four per cent last month to ₹11,863 crore against ₹12,337 crore in March, largely due to ban on NFO launch.

While most of the debt funds recorded a net outflow, the liquid and ultra short term funds registered an inflow of ₹28,731 crore (outflow of ₹44,604 crore) and ₹15,089 crore (-₹2,840 crore) while money market funds attracted ₹16,194 crore (₹5,487 crore) investment.

AUM rises

Overall, mutual fund industry AUM increased to ₹38.04-lakh crore (₹37.56-lakh crore) with the net inflow of ₹72,847 crore (outflow of ₹69,883 crore).  The mutual fund industry AUM stood at an all-time high.

NS Venkatesh, Chief Executive, AMFI, said mutual fund investors continued their SIP mode of investments in equity side and reallocated their savings in debt funds more towards shorter duration schemes owing to recent hike in rates by RBI.

Published on May 10, 2022
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