Net inflows into equity MFs jump 130% to Rs 14,100 crore in September

Mutual fund (MF) investors remained largely unperturbed by volatility in equity markets in September as they bankrolled MF schemes last month via systematic investment plans (SIPs).

SIP inflows surged 2 per cent month-on-month (MoM) in September to Rs 12,980 crore, according to the latest data released by the Association of Mutual Funds in India (Amfi).

Net inflows into equity schemes, which had declined for three straight months to hit a 10-month low of Rs 6,100 crore in August, went up 130 per cent MoM to Rs 14,100 crore.

Notwithstanding markets being in the red last month, with the Nifty50 having shed more than 3 per cent, the surge in investments into equity schemes held steady.

Industry executives said buoyant equity inflows displayed investor confidence in the Indian market.

“India continues to remain a bright spot amid fears of recession the world over. This is the right time to invest in Indian equities. Investors are doing just that,” said Amfi Chief Executive Officer (CEO) N S Venkatesh.

 

“Healthy growth in net equity inflows after two months of below-average trend augurs well for markets. Indian investors have reposed faith in the domestic economy and markets despite market volatility and global negative trends,” said Akhil Chaturvedi, chief business officer, Motilal Oswal Asset Management Company.

However, debt funds witnessed outflows amounting to Rs 65,000 crore. Most schemes bled in September, with liquid funds alone losing Rs 60,000 crore.

Venkatesh cited redemptions by corporates for advance tax payments as reason for the outflows.

“The outflows from debt schemes are understandable, given companies withdraw money at the end of every quarter to pay advance tax. Moreover, the interest rate hikes have adversely affected longer duration funds, leading to redemptions,” he said.

The spike in net collections by equity schemes, combined with Rs 13,600-crore net inflows into index funds and exchange-traded funds, resulted in 0.8 per cent MoM growth in the average monthly assets under management of the industry to Rs 39.9 trillion.

Going by SIP inflows in the first six months of the current calendar year (CY22), the industry seems set to breach record SIP collections of the previous financial year. In the first six months of CY22, MFs received Rs 79,000 crore through SIPs, compared with Rs 1.25 trillion in 2021-22 (FY22).

SIP inflows were on a growth track since the start of FY22. Inflows, which were around Rs 8,600 crore in April 2021 rose to Rs 12,300 crore by March 2022 and have continued to rise, albeit slowly in 2022-23.

Experts believe investors have matured over time and look at equity MFs as a long-term wealth creator. The rise in the ease of investing due to digitisation, lack of high-return delivering options, and rise in incomes in the formal sector have played a pivotal role.

“MFs started gaining higher traction after demonetisation when investments started shifting from fixed assets to financial assets. Covid-19 took this shift to the next level by bringing savings and investments into sharp focus. A rise in the ease of investment due to digitisation only turned in favour of MFs,” said Swarup Mohanty, CEO, Mirae Asset Investment Managers.

Mohanty also highlighted record investor addition last year.

“The demography of the country is playing out in MFs’ favour. The industry added over 10 million new investors in FY22, compared with 22.9 million in the first 20-25 years of existence,” he added.

Household savings data released by the Reserve Bank of India also indicates a swing in investment pattern.

According to the data, MFs recorded a 150 per cent jump in gross inflows from retail investors in FY22, even as overall household savings declined 19 per cent year-on-year.