Equity MFs record net monthly inflows after eight-month gap in March

Segment reports Rs 9,115 cr inflows; Debt segment see outflows Rs 52,528 cr

Equity-oriented schemes in March have reported net inflows of Rs 9,115 crore. In the previous eight calendar months, equity mutual funds had seen continuous net outflows despite a sharp surge in the stock market.

The fall in the market from its all-time highs in February coupled with tax-savings related investments have aided flows, say industry players.

Gross redemptions in March came in at Rs 18,908 crore for equity schemes. In the previous three months, redemptions were in the range of Rs 25,000-36,000 crore.

“In the last fiscal there were concerns due to the lockdown and investors continued to book profits in rising markets. But now it seems people have started coming back to MFs as they were seeing some light at the end of tunnel post Covid-19,” said Swarup Mohanty, chief executive officer at Mirae Asset Management Company (AMC)

He said it remains to be seen if the positive trend continues amid a second wave of Covid-19.

Nine of 11 sub-categories of the equity segment saw net flows, with sectoral funds witnessing highest flows of Rs 2,009 crore. Mid-cap funds, focused-funds, equity-linked saving schemes (ELSS) and flexi-cap funds saw inflows of over Rs 1,000 crore each.

Overall, assets under management (AUM) segment rose 1.6 per cent month-on-month to Rs 9.79 trillion. In March, Sensex gained by just 0.8 per cent, while Nifty was up by 1.1 per cent.

“Higher gross sales and lower redemptions for the month is clearly an outcome of faith in subsiding of fear of Covid -led slowdown in economy to V-shaped recovery in many sectors across economy,” said Akhil Chaturvedi, Head of Sales & Distribution, Motilal Oswal Asset Management Company.

Even the investments through systematic investment plans (SIPs) showed huge uptick in March at Rs 9,182 crore. The SIP AUM rose to Rs 4.27 trillion. Other categories like hybrid schemes and passive schemes saw net inflows.

Debt-oriented schemes saw net outflows of Rs 52,528 crore. The liquid funds category saw net outflows of Rs 19,383.68 crore, while other categories like low duration funds, short duration funds and banking and PSU funds saw sharp outflows in March.

“On debt side, the quarter end phenomenon has played out with corporates redeeming their allocations to fulfil their tax mandates. However, corporate bond fund, dynamic bond and floater fund have seen positive flows owing to investors preferring to take advantage of the flexibility offered by the duration strategy, and RBI preferring accommodative stance to help pursue growth over inflation,” said N S Venkatesh, AMFI Chief Executive.

Overall, MF industry reported net outflows of Rs 29,745 crore, while net AUM stood at Rs 31.42 trillion at the end of March.