The mutual fund industry witnessed a big upturn in investor preference for schemes with inflows into equity-linked MFs falling sharply from Rs 22,583 crore in July 2021 to around Rs 8,677 crore in August, the latest monthly data released by the Association of Mutual Funds of India (AMFI) showed.
The sharp decline could be attributable to launch of a number of large equity-oriented schemes (new fund offers) in July as compared to August.
But the fall has been much starker for debt-oriented funds and schemes where net inflows in August reduced to a mere Rs 1,074 crore in comparison to Rs 73,694 crore inflows seen in July. This is largely on account of increased influx in liquid and market funds where money keeps moving in and out at frequent intervals.
The inflows into index funds including Gold ETFs, however saw a marginal increase in August to Rs 11,592 crore, higher from previous month’s inflows of around Rs 10,000 crore.
“Overall positive flows in the open-ended MF schemes and market indices touching all-time high, helped the Indian MF Industry Net AUMs (asset under management) to breach record Rs 36 lakh crore milestone in August 2021.
“Retail AUM at Rs 17.15 lakh crore, almost half of total industry AUMs, SIP AUMs at record high Rs 5.26 lakh crore, which now forms a third of Retail AUM, healthy rise in SIP accounts at record Rs 4.32 crore and monthly SIP contribution at an all-time high at Rs 9,923.15 crore is reflective of established and rising retail preference towards mutual funds as a long-term wealth creation avenue,” said AMFI Chief Executive N.S. Venkatesh.
“Continued robust month on month fund mobilisation in arbitrage and dynamic asset allocation schemes and affinity towards thematic/sectoral and diversified Flexicap schemes since the start of the new fiscal, FY22, including through SIPs has over-shadowed profit-booking during the last few months,” he added.
Kotak Mahindra Asset Management Company Chief Investment Officer, Debt and Head, Products Lakshmi Iyer said : “August month saw continued flows in floating rate category in fixed income with net sales of nearly Rs 10,000 crore. Anticipation of tighter liquidity conditions due to the RBI announcement of additional VRRR could have prompted this move. Categories like medium to long term, gilt etc also saw positive net sales as the steep yield curve offers cushion to any potential abrupt rise in rates.”
In August while large cap, small cap funds, and Mukti cap funds saw large outflows, inflows increased in index funds with investors look for passive investing in the market rather than adopting a more direct approach.