Most MF schemes in the red: Investor flows not impacted by market fall

All equity mutual fund (MF) categories, with the exception of information technology (IT), delivered negative returns in February, amid a 5 per cent drop in the benchmark indices.

The worst hit were schemes focused on the banking sector. The average return for this category was a negative 7 per cent.

On the positive side, average category returns were much better than the performance of the Bank Nifty index, which declined 16.4 per cent last month amid a meltdown in public sector banking stocks.

The popular large-cap category delivered a negative 4.3 per cent, largely in line with the 4.85 per cent decline in the benchmark Nifty on the National Stock Exchange.

Despite the sharp correction and increased volatility, the pace of investor flow into equity schemes, particularly through the systematic investment plans (SIP), seems to have continued. 

Sector officials say inflow continues to remain strong and the tally could be in line with previous months, inflows through the SIP route could be even higher than in January.

Net inflow in the equity segment could be at least Rs 150 billion, with SIP inflow a record Rs 70 billion. The Association of Mutual Funds in India is expected to issue its figures next week.
 

G Pradeepkumar, chief executive officer (CEO) of Union MF, says: “Investors have used the recent corrections as opportunities to buy. We could see a good amount of additional purchases during the month. SIP inflows have been growing.”

One indication of this is that equity fund managers had put a little over Rs 130 billion into stocks till February 26. The average inflow into equity schemes so far this financial year (April 2017-January 2018) has been Rs 150 billion. August and November saw equity inflows surpassing Rs 200 billion.

A Balasubramanian, chief executive at Aditya Birla Sun Life MF, says, “Post the Union Budget, there has not been any impact on MF inflows. Money is continuing into come to the sector and the trend should continue.”

Veteran fund managers had cautioned investors at the start of the year that 2018 might be highly volatile and return expectations need to be toned down. According to them, if investors have an investment horizon of three to five years, they should not worry about the recent market dips.