Money & Banking

Inflows into equity MF schemes down 60% on market turbulence, downgrades

Suresh P Iyengar Mumbai | Updated on May 09, 2019 Published on May 09, 2019

NS Venkatesh, CEO, AMFI

But despite uncertainties, the mutual fund industry has done better, says AMFI chief

Reflecting the turbulence in the capital market and the series of corporate rating downgrades, the inflow into equity schemes of mutual funds was down 60 per cent in April to ₹4,609 crore from ₹11,576 crore logged in March.

Similarly, inflows into equity-linked tax-saving schemes dipped 83 per cent last month to ₹458 crore from ₹2,742 crore registered in March leading to a sharp drop in equity assets of mutual funds.

The equity assets under management (AUM) of mutual funds dropped 12 per cent to ₹7.37-lakh crore from ₹8.40-lakh crore in March.

According to NS Venkatesh, Chief Executive Officer, AMFI, some of the AUM data for April cannot be compared with March as certain schemes were regrouped and reclassified to report data in the new format prescribed by SEBI.

Inflows into tax-saving schemes peaked in March as investors rushed to save tax with the financial year coming to an end, he said.

On the whole, he said, mutual funds have done better to attract retail investments in equity despite the uncertainty clouding the market.

 

Steady growth in SIPs

Steady growth in equity SIPs (systematic investment plans) and continued net inflows into equity schemes reflect the overall retail and institutional investor confidence in the India growth story, he said.

The assets under management of the mutual fund industry increased 4 per cent last month to ₹24.78-lakh crore against ₹23.79-lakh crore logged in March, largely due to inflows into liquid and ultra-short duration funds.

Liquid funds saw inflows of ₹89,778 crore, and ultra-short duration funds received ₹11,000 crore, according to Association of Mutual Funds in India data released here on Thursday.

Retail AUM increased a marginal 2 per cent to ₹10.9-lakh crore from ₹10.72-lakh crore logged in March. Inflows through SIPs inched up 2 per cent to ₹8,238 crore (₹8,055 crore) with the addition of 3.62 lakh folios.

Fixed maturity plans, which are in the limelight for all the wrong reasons, witnessed outflows of ₹17,600 crore. Mutual funds have forced FMP investors to either extend the maturity period or wait endlessly for returns.

Credit risk fund

The open-ended credit risk funds, which are reeling from the spate of downgrades in instruments they have invested in, registered an outflow of ₹1,253 crore.

Attributing the outflow in these schemes to the nervousness in the market owing to rating downgrades and defaults, Venkatesh said investors are now in a wait-and-watch mode with the a global trade war in air, and the uncertainties over the outcome of the general elections.

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Published on May 09, 2019
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