The domestic fund market saw a substantial dip of 93 per cent in net inflows in the various schemes in February, compared with the earlier month. Courtesy, flow of redeemed money of the December quarter in January and profit booking in the equity segment of the later part of February, before the Union Budget.
The net inflows dipped to Rs 6,365 crore in February against Rs 97,242 crore in the previous month, according to the Association of Mutual Funds in India. At the same time, sales of mutual fund products also dipped to Rs 7.5 lakh crore from Rs 8.8 lakh crore during the period, a dip of over 14 per cent.
Naval Bir Kumar, CEO of IDFC Mutual Fund, said: “Dip in net inflow and overall sales is primarily due to the flow of redeemed money in December in the beginning of the current quarter in January.”
As a whole, though, barring gilt funds and liquid/money market funds, all fund categories — income funds, equity funds, equity linked saving schemes (ELSS), gold exchange traded funds — witnessed net inflows in February.
Net inflows started in January in equity schemes after a gap of five months, since the Securities and Exchange Board of India put a ban on entry load in these. To the relief of the industry, the trend continued in February, too. The segment saw net inflows rising up to Rs 1,514 crore in February from Rs 980 crore in January, a rise of 54.5 per cent.
“This, in fact, is a positive trend,” said Arindam Ghosh, CEO of Mirae Asset Mutual Fund. “Presently, there are two kinds of products which are being sold, more-tax saving products and unit linked insurance products,” he said. On the overall trend, he added, the growth dipped, as there were inflows in the insurance companies because of imbalance in commissions to the distributors.
Surajit Mishra, executive vice president at Bajaj Capital, said: “There has been profit booking on the equity side before the Budget, which impacted the sales. In January, almost 60 per cent of the redeemed money from the banks in December had come back, which pushed the sales up. However, in February we did not have that kind of flow.”
He added that with the corrections the market saw in February, money poured into the equity segment.
Income funds witnessed a net inflow of Rs 4,887 crore, which in January stood at Rs 106,092 crore. In case of balanced funds, net inflow further rose to Rs 88 crore from Rs 56 crore in the previous month, whereas ELSS funds managed Rs 335 crore, a rise of Rs 67 crore.
The average of assets under management in February was marginally up by 2.6 per cent to Rs 7.8 lakh crore from Rs 7.61 lakh crore on a month-on-month basis.
