MFs' monthly equity holding drops 38% from September

Gross sales in equity schemes have come off from their highs

India’s equity fund managers have slowed their pace of pumping money into the stock markets this quarter. Against the backdrop of slowing gross sales amid choppy markets, the average monthly investment by fund managers has dipped 38 per cent to Rs 4,000 crore now, down from Rs 6,500 crore in September this year.

Fund managers are cautious. The key stock indices are down eight per cent and have lost 14 per cent since all-time high. Fund managers do not see an end to volatility in the near term.

Pankaj Murarka, head of equities at Axis Mutual Fund, says: “There are significant challenges. We have to learn to live with volatility. If something goes wrong globally, which triggers a sell-off of the kind we saw in the past few months, I do not rule out one. The growth is elusive in the western economies. This has only got compounded as China, the world’s growth engine, is slowing, hitting global growth.”

This has started reflecting in fund managers’ investment momentum, too. Sample this: Till this September, fund managers had pumped in Rs 58,200 crore in stocks in the calendar year, with an average monthly investment of Rs 6,465 crore. However, in the current quarter, the monthly average has slipped to as low as Rs 4,000 crore. The month of October could see only Rs 2,935 crore of investments, while the current month has thus far witnessed investments to the tune of Rs 2,519 crore. November was better in relative terms.

Gross sales in equity schemes have taken a hit. Against the high of nearly Rs 18,000 crore a few months ago, the past two months saw Rs 12,000-14,000 crore of sales in the equity segment.

According to the national sales head of a large fund house, the pace of inflows has come down in recent months.

“But, it is too early to call it a trend. We need to wait for a couple of months. There are redemptions from equity schemes, but I would not call it alarming at this stage,” he said.

In an earlier interview to the Business Standard, the outgoing head of equity at UTI Mutual Fund, Anoop Bhaskar, had said: “To some extent, the faith in equities hasn't still been shaken. The real test will come when you have another correction, deeper than the first one. If there are more months of decline, this hypothesis will be tested.”

In one its reports in November, Bank of America-Merrill Lynch had said, “Despite negative sentiments, domestic mutual funds have continued to receiving strong inflows from individual investors. They have seen 18 consecutive months of inflows worth $18 billion. We continue to expect this trend to continue, but at a slower pace, at least over the near term on the back of expectations of an economic recovery.”

The assets under management of equity schemes have surpassed the Rs 4 lakh crore mark — the first time in the sector’s history.

There has been an addition of nearly four million investors’ accounts thus far in 2015.