Equity MF inflows at six month low; SIPs at record highs

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With benchmark indices hitting lifetime highs in the month of October investors turned cautious as inflows into the equity mutual funds hit a six-month low. As per data released by the Association of Mutual Funds in India (AMFI), net inflow in open-ended equity schemes plummeted by 39.90% to Rs 5,214.87 crore in October 2021 compared to Rs 8,677.41 in September 2021.

“Positive sentiments and rally in the equity markets continue to attract investors into equity-oriented mutual funds in October as well. However, the quantum of net inflows dropped from September. This could be a result of investors booking profits with markets trading near all-time highs. Also, many investors would have chosen to stay on the sidelines given higher valuations. This is evident as the fund mobilised fell from Rs 36,656 crores in September to Rs 28,671 crores in October,” said Himanshu Srivastava, Associate Director – Manager Research at Morningstar India.

Barring equity-linked saving schemes (ELSS) which saw a withdrawal of Rs 488.11 crore and value funds witnessed net outflows of Rs 349.14 crore, all the other equity schemes witnessed net inflows during the last month.

Hybrid funds in demand

Investors continue to prefer hybrid funds for the third month in a row. As a matter of fact, all hybrid schemes put together saw a net inflow of Rs 10,437.11 crore double of what open-ended monthly schemes saw. On monthly basis as well, this category saw a 190.92% jump in inflows from Rs 10,437.11 in September 2021.

“Higher net flows in the hybrid and balance advantage category to the tune if Rs.10400cr signifies retail investor taking cautious view at current market levels and being prudent by taking balanced view while investing into equities to limited extent. This  strategy is a good way to use proprietary valuation models of various mutual funds and have adequate exposure to equities to no miss out from any upside; and at the same time having enough cash to deploy in event of any meaningful corrections,” said Akhil Chaturvedi, Chief Business Officer of  Motilal Oswal AMC.

Record-breaking SIPs

The contributions under the systematic investment plan (SIP) continued to break records for the seventh month in a row as it touched lifetime highs of Rs 10,518.53 crore in October 2021 versus Rs 10,351 crore witnessed in September 2021.

“It is heartening to see investors are choosing mutual funds as an investment for long term financial planning for their own retirement and children’s welfare. This is quite evident from monthly SIP contribution getting consolidated at record high level,” said N S Venkatesh, Chief Executive of AMFI.

Even the number of SIP accounts stood all-time high in October 2021 at 4,64,30,598 compared to 4,48,97,602 in September 2021.

Likewise, the asset under management under the SIP category is also at record highs of Rs 5.53 lakh crore in October 2021 versus Rs 5.44 lakh crore in September 2021.

Index funds

Inflows into index funds continued upward trajectory as investors pumped in Rs 3,514.21 crore in October 2021 compared to Rs 3,104.35 crore in September 2021.

“Passively manged funds continue to attract investors interest on the back of sharp rally in the equity indices. During the month 4 index funds and 3 Other ETFs funds were launched which cumulatively accumulated Rs 1,119 crores,” Srivastava added.

Debt funds

After witnessing net outflows in September, Debt oriented funds received net inflows to the tune of Rs 12,984.38 crores in October. “With the underlying interest rate environment, investors chose to mostly invest in less than one-year segments. Hence, Ultra Short Duration Funds, Low Duration Funds and Money Market Funds received robust flows,” Srivastava said.

Gold ETFs

Gold ETFs continue to attract investor attention as they garnered net assets worth Rs 303.6 crores in October.  “As expected, the festivities kept the asset class in demand. Gold sale levels this Dhanteras at 50 tonnes, almost 20 tonnes more than the 2019 Dhanteras,” said Priti Rathi Gupta, Founder, LXME.

Asset under management

The Average AUMs (Asset Under Management) and the Net AUMs for Indian Mutual Fund Industry have risen to a record high levels at Rs 38.21 lakh crores, and Rs 37.33 lakh crores respectively as on October 2021.

“Net Positive flows during October 2021, in all categories of open-ended mutual fund schemes be it Debt, Equity, Hybrid, Solutions-oriented, or Index, FoFs (Fund of Funds) or ETFs coupled with continued buoyancy in SIP flows, at historic high, has peaked overall Indian MF Industry AAUMs to an all-time high of INR 38.21 lakh crores,” Venkatesh added.