PremiumMumbai: Net inflows into equity mutual fund schemes reduced to half in June as redemption pressure intensified slightly with investors rushing to book profits following markets hitting record highs.
According to data released by the Association of Mutual Funds in India (AMFI) on Thursday, net inflows into equity mutual fund schemes were at ₹4,608.75 crore in June, down 50.09% from ₹9,235.48 crore in the previous month. Inflows into such schemes were at ₹225.25 crore in June last year.
Redemptions from equity schemes were at ₹18974.82 crore in June from ₹14169.63 crore in the previous month and ₹13520.03 crore in June last year.
“It should be noted that prior to March 2021, the segment witnessed net outflows for eight continuous months. With the net inflows in March, April, May and now in June, clearly investors are gaining their conviction back on the equity markets," Himanshu Srivastava, associate director – Manager Research, Morningstar India said.
According to Srivastava, the lower quantum of net inflow compared to May could also be attributed to profit-booking by investors with equity markets witnessing a sharp rally in recent times. This is evident from the high redemption amount in June compared to May. But at the same time, the amount mobilised was also higher in June than May, signifying that investors are willing to invest more in equity markets now, he said.
“Significant improvement on the coronavirus situation in the country, along with improving recovery rate, pick-up in vaccination drive have provided comfort to investors. Good quarterly results and positive earnings growth outlook over the long-term has alleviated concerns of any severe impact of the second wave of the pandemic on the economy. Additionally, surge in markets despite challenges also boosted investor sentiment. These factors have prompted them to again allocate assets towards equities," Srivastava added.
Except for the ELSS category and value/contra fund category, all the equity-oriented categories witnessed net inflows in June. Mid Cap Fund category attracted significant investments to emerge as the biggest beneficiary during the month as it received net inflow of ₹1,729.07 crore.
However, overall net inflows into equity schemes in the first six months of 2021 have been disappointing. Data showed, net inflows into into equity mutual fund schemes were at ₹4036.25 crore in January to June of this year compared to a robust inflow of ₹41141.50 crore in same period last year.
“For now, the trend surely is in favour of Indian equities by domestic investors. It is particularly very encouraging to witness good amount of interest in dynamic / asset allocations funds.The prime objective of the funds in this category is to use valuation models and then dynamically rebalance portfolio between equities and fixed income ensuring better risk-adjusted returns for investors. In current environment, dynamic / asset allocations funds are good option for investors certainly," Akhil Chaturvedi, Associate Director, Head of Sales & Distribution, Motilal Oswal Asset Management Company said.
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