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MF equity inflows hit new low in June on high redemption

Mumbai | Updated on July 08, 2020 Published on July 08, 2020

Inflows into equity schemes of mutual funds plunged to a new low of ₹241 crore in June against ₹5,256 crore in the same period last year on a surge in redemption by investors.

Outflows of multi- and large-cap funds were ₹778 crore and ₹213 crore last month against inflows of ₹759 crore and ₹1,556 crore in May.

Himanshu Srivastava, Associate Director, Morningstar India, said inflows into equity-oriented funds were substantially lower on the back of net outflows from multi- and large-caps due to profit-booking by investors, given the surge in the markets in recent times.

Equity-linked saving schemes and focussed funds reported inflows of ₹587 crore and ₹317 crore in June, much lower than the ₹712 crore and ₹670 crore logged in May. Small-caps registered inflows of ₹249 core (₹293 crore).

Fall in SIPs worrying

Investment through monthly systematic investment plan fell below the ₹8,000-crore mark to ₹7,927 crore against ₹8,123 crore in May. The SIP asset under management jumped to ₹3.84-lakh crore against ₹3.20-lakh crore.

G Pradeepkumar, CEO, Union AMC, said the fall in monthly SIP contribution is worrying, but it was expected given the strain on cash flows and incomes experienced by many investors on account of Covid-19.

The overall assets under management of mutual funds gained 4 per cent to ₹25.48-lakh crore against ₹24.54-lakh crore in May, largely due to mark-to-market gain.

Overall inflows into mutual funds last month plunged 90 per cent to ₹7,265 crore (₹70,800 crore).

Debt fund inflows slipped to ₹2,861 crore (₹63,665 crore) with liquid funds seeing an outflow of ₹44,226 crore against an inflow of ₹61,670 crore in May. Overall debt fund assets increased to ₹11.63-lakh crore (₹11.50-lakh crore).

NS Venkatesh, Chief Executive, AMFI, said reducing interest rates and gradual unlocking of economic activity have seen renewed buoyancy in markets, leading to mutual fund AUMs crossing the ₹25-lakh crore-mark for the first time in this fiscal.

But Arun Kumar, Head of Research, at FundsIndia.com, said future equity flows will depend, to a large extent, on how soon investors regain confidence on their cash flows returning to normal levels. In fact, he added that equity inflows have slowed down as many investors are waiting for clarity on cash flows before investing further. Some investors have also been caught by surprise over the sharp equity rally and are waiting to enter back at lower levels, he said.

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Published on July 08, 2020
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