Flows into equity MFs dip 62% in April as investors hold back

Suresh P Iyengar Mumbai | Updated on May 11, 2021

Second month of inflow in last 10 months

Inflows into equity schemes of mutual funds dipped 62 per cent in April to ₹3,437 crore from ₹9,115 crore in March as investors turned cautious with the Covid second wave raging on.

However, this is the second consecutive month of positive flows. In the previous eight months, there had been steady outflows as investors booked profit.

Thematic fund registered inflows of ₹1,705 crore while mid- and large-cap funds logged ₹985 crore and ₹708 crore, respectively.

Value funds registered a net outflow of ₹674 crore as did multi-cap and equity-linked saving schemes, of ₹157 crore and ₹136 crore, respectively.

Given the volatility, arbitrage funds recorded the highest inflows of ₹7,245 crore and balanced funds of ₹1,700 crore.

Redemption flat

Himanshu Srivastava, Associate Director, Morningstar India, said the quantum of redemption in equity schemes was almost the same as last month and the funds mobilised were lower than in March, suggesting some of the investors still prefer to stay on the sidelines until more clarity emerges on the impact of the pandemic’s second wave on the economy.

Additionally, some investors would have held back investments in anticipation of market correction given the ongoing concerns, he said.

Debt funds registered inflows of ₹1-lakh crore with liquid and money market funds getting ₹41,507 crore and ₹20,287 crore respectively.

Overall, mutual funds’ AUM (asset under management) was up at ₹32.38-lakh crore against ₹31.42 lakh crore in March.

Investments via monthly systematic investment plan were down at ₹8,590 crore against ₹9,182 crore in March. However, it is will be almost flat if the spill over of ₹500 crore SIP spill over from February to last month is deducted. Since last three days of February was an holiday, SIP registered on these days were processed in March.

G Pradeepkumar CEO, Union AMC, said flows slowed a bit compared to March largely due to the disruption caused by the second wave. Given the expensive valuations, Union AMC has been recommending asset allocation funds, he said.

NS Venkatesh, CEO, Association of Mutual Funds in India, said the inflow into equity will continue as evident from the rising investments through SIP.

Published on May 11, 2021

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