Reflecting the looming uncertainty in the stock market, inflows into equity mutual funds declined 41 per cent last month to ₹14,889 crore against ₹25,083 crore in December, largely due to profit booking and lack of new fund offers.
Except for value funds and equity savings, all segments of equity schemes received inflows even with investors trimming down their allocations.
Balanced advantage and flexi-cap funds received the highest investment of ₹12,763 crore and ₹12,527 crore, respectively, followed by thematic and large-cap funds that attracted inflows of ₹12,073 crore and ₹11,890 crore, respectively, according to data from the Association of Mutual Funds in India released on Wednesday.
Value funds and equity schemes registered outflows of just ₹1,163 crore and ₹128 crore, respectively. In December, the inflow into equity schemes was boosted by six NFOs garnering ₹1,12,446 crore.
Kavitha Krishnan, Senior Analyst, Morningstar India, said in line with global trends, the Indian equity markets have seen a steady fall on the back of a possible USFed rate hike, an economic slowdown in China and growing concerns over the Ukraine and Russia crisis.
On the domestic front, she said, investments into equity schemes were impacted by relatively high market valuations and rising inflation exerting pressure on economic growth.
However, equity AUM of mutual funds crossed the ₹113-lakh crore landmark to touch ₹113.17-lakh crore, while the overall AUM breached ₹38-lakh crore for the first time.
SIP inflows: A new high
Inflows through Systematic Investment Plans touched a new high of ₹1,11,517 crore against ₹1,11,305 crore recorded in December. SIP assets increased to ₹15.05-lakh crore (₹14.91-lakh crore) with the number of accounts hitting a new high of 5.04 crore (4.91 crore).
Passive funds attracted net investment of ₹18,861 crore (₹118,706 crore). Last month, 12 passive NFOs mopped up ₹2,718 crore against 11 NFOs attracting ₹6,671 crore in December.
Gopal Kavalireddi, Head of Research, FYERS, said in a highly volatile stock market, amid continued FII selling over the last three months, index funds and ETFs have remained the preferred investment choices, attracting inflows of ₹14,914 crore and ₹14,009 crore, respectively. However, gold ETFs saw an outflow of ₹1,452 crore against inflow of ₹1,313 crore in December.
Akhil Chaturvedi, Chief Business Officer, Motilal Oswal Asset Management, said there has been a positive change with steady inflows from domestic investors even while FIIs were pulling out from India. Flows into dynamic funds have benefited from increasing equity allocation with every market fall, he said.
On restrictions in fund of funds investing overseas, NS Venkatesh, Chief Executive, AMFI said, given the improved financial strength of the country, the RBI is expected to enhance the overall limit in consultation with the government and an announcement can also be expected in the Monetary Policy to be announced today.