Equity fund inflows moderate from Dec high, SIP investors keep faith
Premium- SIP contribution grew to a fresh all-time high of ₹11,516.62 crore at the end of last month against ₹11,305.34 crore in December
Net inflows into open-ended equity-oriented mutual fund schemes slumped over 40% to ₹14,887.77 crore in January from an all-time high of ₹24,989.57 crore in December, as volatile stock markets kept investors on the edge.
The drop in equity inflows could also be attributed to the lack of new fund offers (NFO) during January. Mutual fund houses had launched six growth or equity-oriented schemes, mopping up ₹12,446 crore in December against zero new schemes last month.
Despite volatility, retail investors have kept faith, as data released by the Association of Mutual Funds in India (Amfi) on Wednesday, showed that systematic investment plan (SIP) contribution grew to a fresh all-time high of ₹11,516.62 crore at the end of last month against ₹11,305.34 crore in December. Further, the total number of SIP accounts topped the five-crore mark for the first time in January.
As per the industry body, the total SIP book stood at ₹5.76 lakh crore at the end of January against ₹5.65 lakh crore in December.
With the latest data, equity inflows have remained positive for the last 11 straight months since February 2021, with some moderation seen in January.
“Concerns over ‘new’ variants across the globe, the relatively high valuations and rising inflation has been placing some pressure on the economy. The factors, amongst others, have likely led to a reduction in the magnitude of flows over the past month," said Kavitha Krishnan, senior analyst-manager research, Morningstar India.
The Indian equity markets have been witnessing a correction in the recent past in tandem with the global markets. The possibility of the US Federal Reserve interest rate hike, a slowdown in China and the growing concern between Ukraine and Russia have led to decline in the equity markets.
Even as the BSE Sensex fell by a marginal half a per cent during January, the index saw wild swings and gyrated by over 4,000 points during the month.
According to the nodal association of mutual funds in India, the overall assets under management (AUM) have grown more than 25% on a yearly basis to ₹38.01 lakh crore at the end of January. The monthly net addition in the total AUM was ₹28,514 crore during the month.
N.S. Venkatesh, chief executive officer, Amfi, said: "Retail mutual fund investor confidence in the India growth story, as reflected through continued all time higher quantum of monthly SIP flows and with the economy expected to rise at projected 9.2%, has overshadowed the uncertainties arising out of external factors like Fed Rate hike or FII outflows."
In terms of specific categories, flexi-cap funds saw surge with net inflow of ₹2,527.16 crore compared to ₹2,408.64 crore in December. Further, large-cap, mid-cap, small-cap and large & mid-cap fund also continued to see decent inflows.
In the hybrid category, dynamic asset allocation/balanced advantage funds that reallocated between debt and equity based on market conditions saw inflows of ₹2,762.95 crore.
“While, on one hand we are seeing FII outflows on the other hand we are seeing positive flows from domestic investors. This is a very positive change amongst investors, it is always advisable to buy on dips for better rupee-cost averaging resulting in good outcomes in long term. It is also encouraging to see positive flows in dynamic category, as most asset-allocation models are maintaining a good mix of debt and equity allocation to benefit from market corrections and increasing equity allocations," said Akhil Chaturvedi, chief business officer, Motilal Oswal Asset Management.
On the other hand, open-ended income or debt-oriented schemes saw inflows of ₹5,087.61 crore in January after witnessing net outflows worth ₹49,037.52 crore in December.
Also, gold funds saw net outflows of ₹451.69 crore during January, while passive strategies index funds and exchange traded funds saw inflows of ₹4,914.43 crore and ₹4,009.03 crore, respectively during the month.
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