Nothing could have been more surprising for the fund managers than seeing equity investors stay put at a time of pessimism.
Anticipating December to be worse than November, fund managers had been fearing higher redemptions. However, proving them wrong, investors chose to stay at a time when benchmark indices have lost four per cent of their values.
With net inflows of Rs 360 crore, pure equity schemes gained, surprising fund managers. Interestingly, some of the executives Business Standard spoke to were sceptical of the statistics released by the Association of Mutual Funds in India (Amfi).
| IN FOR A SURPRISE December fund flow in different MF categories | |
| Category | Net Inflows/(Outflows) |
| Income | -15,401 |
| Equity | 360 |
| Balanced | -88 |
| Liquid/Money market | -48,839 |
| Gilt | 420 |
| ELSS-Equity | 112 |
| Gold ETFs | 157 |
| Other ETFs | -42 |
| Fund of funds investing abroad | -100 |
| All Figures in Rs crore Source : Association of Mutual Funds in India | |
Said Arindam Ghosh, CEO, Mirae Asset, "Despite high pessimism all over the street, it seems serious investors are realising these are chances to build long-term portfolios. Besides, high networth individuals also pumped in funds."
In the previous month, equity schemes (including equity-linked saving schemes) had seen net outflows of Rs 52 crore. Though this was marginal, fund managers anticipated the situation to worsen in December. Along with pure equity schemes, equity-linked-saving schemes (ELSS) also had reasonable inflows of Rs 112 crore during the month.
However, better-than-expected flows in December are not on account of a larger number of new investors. Equity sales have continued to decline, which is a rising concern for the mutual fund industry.
Said Jimmy Patel, CEO, Quantum Mutual Fund, "As investors stayed back, lower redemptions saved the industry." In absolute terms, at around Rs 2,500 crore, redemptions from pure equity schemes were one of their lowest in recent months. But, equity sales, which had hit a 31-month low in November, further slipped to a mere Rs 2,859 crore in December.
Fund managers are optimistic that if markets remain in this range, retail investors might return. "If investors with a horizon of one-and-a-half years come, there is a probability of maximising wealth," adds Ghosh. According to him, there is a growing sense that markets will see some direction as we reach a situation of falling inflation and softening monetary instance.
Funds, including income, balanced and liquid & money market, saw higher redemptions. Fund outflows from liquid funds were mainly on the back of the quarter-ending phenomena, during which financial institutions and companies withdraw funds to meet advanced taxes requirement. While gold exchange traded funds continued to manage positive inflows, gilt funds garnered net inflows worth Rs 420 crore.
