Assets of MFs up 7% even as equity inflow dips in April

Suresh P Iyengar Mumbai | Updated on May 08, 2020

Fall in SIP seen as one-off event

The assets under management of the mutual fund industry were up 7 per cent in April, to ₹23.93 lakh crore against ₹22.26 lakh crore in March, largely due to inflows into liquid schemes even as other categories of debt schemes registered a substantial outflow.

Inflow into equity schemes dipped 47 per cent to ₹6,213 crore against ₹11,723 crore recorded in March, due to huge volatility in the equity market.

Flows through Systematic Investment Plan were down 3 per cent at ₹8,376 crore last month against ₹8,641 crore logged in March.

NS Venkatesh, CEO, AMFI, said the fall in SIP is a one-off event and it will bounce back given the fact that the number of SIP accounts increased to 3.13 crore (3.11 crore).

Retail AUM increased to ₹9.89 lakh crore (₹8.81 lakh crore) as the equity markets bounced back, shrugging off Covid concerns.

Himanshu Srivastava, Senior Analyst, Morningstar Investment Adviser India, said equity investors were looking at investment opportunity amid uncertainty over the possible impact of the Covid lockdown.

The relief rally in April was evident, with the government and RBI taking measures to boost the economy; besides, the relaxation in lockdown to kick-start business and economic activity also helped improve sentiments. Consequently, S&P BSE Sensex surged by about 14 per cent during the month, he said.

Reassess debt portfolio

Credit risk funds, in the news for all the wrong reasons, had seen a highest-ever monthly outflow of ₹19,238 crore last month against outflow of ₹5,569 crore logged in March.

The abrupt shutdown of six debt schemes by Franklin Templeton had its cascading effect on all other debt funds, including low and medium-duration funds registering an outflow of ₹6,841 crore and ₹6,363 crore.

However, the impact of outflow from debt schemes was partially nullified by an inflow of ₹68,848 crore into liquid schemes, which logged a massive outflow of ₹1.10 lakh crore in March.

Venkatesh said the redemptions in debt schemes have stabilised after RBI opened a special window to provide liquidity to mutual funds to meet debt fund redemption.

In fact, he said, it is the right time for investors to reassess their debt portfolio and allocate more depending on their risk appetite as the interest rate is expected to remain soft for the next two years.

Close-ended schemes saw an outflow of ₹9,119 crore on maturity of many funds in April.

Published on May 08, 2020

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