Despite weakness in equity markets, MFs see net inflows of Rs 5,000 cr till May this yr.
Even as foreign institutional investors are underweight on Indian equities, retail investors are looking at entering the market at attractive valuations. According to Amfi data, equity mutual fund schemes witnessed net inflows of Rs 1,546 crore in May, after net outflows of Rs 1,076 crore in April. Rather than staying on the sidelines, retail investors are looking at the negative performance of the broader equity market as an opportunity. In the first five months of the calendar year, funds have seen net inflows of almost Rs 5,000 crore, which accounts for the sum total of inflows into ELSS, balanced, equity and ETFs (excluding gold).
Fund managers believe this reflects the maturity of the retail segment, which is looking at timing its entry into the market. In 2010, when market performance was relatively better, inflows into equity funds stood at Rs 1,860 crore for the first five months of the year, compared to net inflows of nearly Rs 5,000 crore this year. Gopal Agrawal, chief investment officer at Mirae Asset Mutual Fund, says this year a lot more investors have opted for systematic investment plans, which is driving inflows. The domestic MFs have been playing it safe all through May, as discouraging news flow, both domestic and global, continued to affect sentiment. But strong inflows have helped MFs make investments in May. Investment by MFs in equity market stood at Rs 434.9 crore at the end of last month, even as FIIs sold Rs 5,158 crore in the same period.
| FIIs# | MF* | |
| (Rs crore) | Net investment in equity | Net inflows/outflows in equity schemes |
| January | -6,330.30 | 881 |
| February | -3,754.30 | 2,495.00 |
| March | 6,967.00 | -124 |
| April | 7,018.50 | -1,076.00 |
| May-11 |
Fund houses are coming up with different offerings as well to keep the investors interested. Given that Indian equities have underperformed other emerging markets, HSBC launched its Brazil fund for investors wanting to participate in the growth story of alternative emerging markets. This scheme has seen inflows of Rs 313 crore. While this money is not earmarked for the Indian equity markets, it speaks volumes about the investor sentiment.
So, what’s yielding returns for investors? FMCG and pharmaceuticals sectors have proved to be good defensive plays. During the month, pharma funds topped the scoreboard with 1.8 per cent growth, followed by FMCG funds that grew 0.5 per cent on an average. Franklin FMCG Fund remained the top performer among all the other funds.