Net inflows into equity mutual fund schemes dipped significantly in August from the previous month’s record inflows, while data released by the Association of Mutual Funds in India (AMFI) on Wednesday showed redemption pressure too. Net inflow of equity schemes received ₹8,056.80 crore in August, down 61.15% ₹20,742.77 crore in July. However, this is the sixth consecutive month of positive inflows in such schemes.
With the market hitting record highs in August, investors pulled out this month, leading to more redemptions, say experts. Equity schemes had net redemptions ₹23144.89 crore in August ₹17831.65 crore in July.
Ashish Somaiya, chief executive officer, White Oak Capital, said there is a significant reduction in net inflows for the equity category and a corresponding jump in net inflows for the balanced profit category.
“This leads to the belief that New Fund Offers (NFOs) with large balanced gains at the overall industry level have gained a lot of traction through the switch from Equity to Balanced Gains category. This may not be a bad growth in the short term from the point of view of retail investors, as market levels are high and funds with generally balanced leverage have low risk perceptions,” he said.
According to Mohit Nigam, head-PMS, Hem Securities, the month-on-month decline in equity MFs can be attributed to profit booking, especially in some mid and small caps.
NFOs contributed Rs 23,668 crore to all categories of funds in August, compared to NFO collections in July ₹17332 crores. However, SBI Balanced Advantage Fund, launched in August, which raised Rs 14,551 crore, was a hybrid scheme with a mixed allocation for equity and debt. ICICI Prudential Flexicap Fund Raised in July ₹9,808 crore which was the equity scheme.
Monthly systematic investment plan (SIP) contribution climbs to record high ₹9,923.15 crore in August. This is in comparison to the previous month’s SIP inflow of Rs 9,608.86 crore. The new SIP record registered during August at 24.92 lakh is the highest ever with 4.32 crore SIP accounts. SIP accounts stood at 3.30 crore in August last year.
NS Venkatesh, CEO, AMFI said, “The overall positive inflows in open-ended MF schemes and market indices helped the Indian MF industry break a record-breaking net AUM by touching an all-time high. ₹36 lakh crore milestone in August 2021. Month-on-month fund raising through arbitrage and dynamic asset allocation schemes and thematic/regional and diversified flexicap schemes since the start of the new financial year, FY22, which has more capped gains through SIPs than last few months during booking,” Venkatesh said.
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