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Inflows into hybrid mutual fund schemes have zoomed in the last seven months to ₹72,081 crore against an outflow of ₹17,149 crore in the preceding seven months ended March, on the back of growing uncertainty in the equity market.
Hybrid schemes have also been attracting some of the flows from the debt funds after the removal of long-term capital gain tax since April.
Under the new rules that kicked in from April 1, debt mutual funds held for more than three years will no longer enjoy indexation benefits. Indexation takes into account the inflation during the holding period of a mutual fund unit and consequently increases the purchase price of the asset and reduces the tax.
Of the overall inflows in the hybrid category, arbitrage funds accounted for ₹48,978 crore while multi-asset funds had attracted an inflow of ₹14,239 crore.
The asset under management of the hybrid category increased 19 per cent last month to ₹5.88 lakh crore against from ₹4.94 lakh crore in April.
Vikas Srivastava, an independent mutual fund distributor said the arbitrage category is predominantly dominated by institutional investors, and significant inflows and outflows are common in this category.
However, due to the current highly attractive arbitrage spreads, the net flows in this category are currently the highest among hybrid funds, he added.
Playing to the gallery, new fund offers in the hybrid category had raised ₹7,823 crore in the last seven months with the major chunk of ₹4,791 crore coming from three multi-asset allocation NFO launched by Kotak Multi Asset Allocation Fund, DSP Multi Asset Allocation Fund and Shriram Multi Asset Allocation Fund.
In October, Kotak Mahindra AMC announced that it had collected ₹3,600 crore through over 1 lakh applications for its NFO of multi-asset fund.
The scheme invests 65-80 per cent in equity, 10-25 per cent in debt and money market securities, 10-25 per cent in commodity ETFs, exchange-traded commodity derivatives, and any other mode of investment in commodities as permitted by SEBI from time to time, 0-15 per cent in overseas mutual funds schemes/ ETFs/foreign securities, and 0-10 per cent in units of REITs and InvITs.
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