Mumbai: The mutual fund industry’s assets under management (AUM) rose 3% to a record high of Rs17.9 trillion in February, buoyed by inflows into equity funds, and a buoyant stock market, data from the industry body showed.
Experts expect the trend to continue, and see more funds flowing into equity schemes, as investors pep up their tax saving investments for the fiscal year end.
Net inflows into equity funds jumped 32.4% to Rs6,462 crore, and the equity funds’ AUMs rose 4.7% to a record high of Rs5.2 trillion, data from Association of Mutual Funds in India (Amfi) showed.
“I think this trend will continue,” said Navneet Munot, chief investment officer at SBI Mutual Fund, adding that even as inflows into mutual funds have been decent for last three years, considering the fact that equity allocations in investors’ portfolio are still small, there was still a long way to go.
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“Also, since interest rates have come down, ELSS (equity-linked saving schemes) could be preferred over other tax-savings instruments,” said Munot. Tax saving investments tend to see a pickup in March, as investors plan them around the financial year end.
In February, BSE’s 30-share benchmark Sensex rose 4%, while National Stock Exchange’s 50-share Nifty logged a 3.7% gain.
Munot also said that investments through the SIP (systematic investment plan) route are growing at a healthy rate, as more investors are opting for this option.
SIP is an investment vehicle offered by mutual funds to investors, which allows them to invest using small amounts into their schemes at regular intervals instead of lump sum investments at various points of time. Such investments are mostly carried out on a monthly or quarterly basis.
According to Srikanth Meenakshi, founder and director fundsindia.com, SIP investments multiplied 2.5-3 times in February from a year before on fundsindia platform, and translates to 8-9% growth on a month-on-month basis
“If you look at the seasonality aspect, retail flows into equity funds are typically high in the first quarter of the calendar year from investment and tax saving perspective,” said Srikanth Meenakshi, founder and director fundsindia.com
“For liquidity and money market funds – institutions tend to make significant withdrawals from these funds in the January March quarter, which explains slowing down on that front,” added Meenakshi.
Net Inflows into income and liquid funds dropped 62% and 22%, respectively in the month of February from January to Rs10,864 crore and Rs8,227 crore, respectively.
