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The long wait of mutual fund houses to attract big time money in equity schemes appear to be over now. The industry has taken a big leap in the month of June when it comes to inflow of money into equity funds.
The gross sales in equity-related funds have hit a massive Rs 12,386 crore in June, probably the highest in sector's history. This is overwhelming at a time when fund houses were stuck long with dull gross equity sales of Rs 3,000 crore every month.
The good news for equity category does not stop here. In terms of net inflows, the industry got a whopping Rs 7,153 crore in equity schemes - not seen in recent memory.
BSE's Sensex gained nearly 5% during June or 1,200 points to decisively surpass the 25,000 mark.
It is interesting to note that in the previous month, industry was rejoicing after surpassing Rs 10,000 crore mark as gross sales in equities. Though, some had thought it be an aberration but those fears were subsided after the industry body Association of Mutual Funds in India (Amfi) released the latest monthly statistics.
Higher net inflows is an encouraging signal. In the previous month, despite a rise in gross sales, net inflows were merely Rs 2,000 crore as investors continued to redeem units.
"Redemptions requests are on the decline. This is clearly reflecting in the higher net inflows to the schemes. Though broader trend looks to be positive but I doubt whether industry will continue to get such a high flows of money in the coming months," says, chief investment officer (CIO) of mid-sized fund house.
"Gross sales are on the rise, which is a big positive," Supreet Bhan, executive director & head (retail sales) at JP Morgan Mutual Fund (India) had told Business Standard earlier. Though there are redemptions but they are not as rampant as they were earlier, he added.
Net investments in shares by equity fund managers touched the highest in six years in June at Rs 2,763 crore. That was a function of higher net inflows in the equity schemes.
It was in May that fund managers' net investment in stocks turned positive for the first time since August last year. Though, the amount was quite minuscule at about Rs 105 crore, sector's executives were hopeful for a trend change.
"Investors are more hopeful than earlier and this is reflected in their choice of investment. The number of transactions has increased twofold, favouring equities. It's a turning point and the trend should continue," said Kalpen Parekh, CEO, IDFC Mutual Fund.
It needs to be noted that since 2009-10, fund managers have sold stocks worth a whopping Rs 75,000 crore as investors kept on redeeming their investments. However, the tide appears to be turning for the industry.
Currently, industry offers 370 equity schemes (including ELSS) to investors and have an assets under management (AUM) of Rs 2.41 lakh crore. This constitutes around 25% of sector's overall assets.
