Equity-focused categories have seen consistent net inflows since March 2021
Equity-focused categories have seen consistent net inflows since March 2021
Equity funds posted a record net inflow of ₹28,463 crore in March on continued interest from retail and HNI investors who saw the market correction as a good buying opportunity.
The net infusion, which also marks the 13th straight month of net inflows, shows the underlying bullish sentiment among investors despite record outflows from foreign funds.
This was significantly higher than net inflows of £19,705 billion in February, £14,888 billion in January and £25,077 billion in December 2021, Association of Mutual Funds in India (AMFI) data showed on Friday.
As such, the equity-focused categories received a robust net inflow of ₹1,64,399 crore in FY2021-22, compared to the net outflow of 25,966 crore in FY2020-21.
Akhil Chaturvedi, Chief Business Officer, Motilal Oswal AMC, attributed the recent monthly inflow to continued interest from retail and HNI investors to take advantage of market opportunities and correct for better valuations.
“The ongoing Russia-Ukraine crisis has kept the market volatile, giving investors advantages to allocate higher or rebalance their existing allocations. All in all, risk appetite for stocks is certainly increasing, which is very healthy for markets and investors for long-term wealth creation,” he added.
Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, said geopolitical tensions amid the raging war between Russia and Ukraine and concerns about rising crude oil prices prompted a sharp correction in the market in late February and early March. This provided investors with a good entry point into equities.
NS Venkatesh, CEO of Amfi, said SEBI’s ban on launching a new fund offering (NFO) will not affect inflows into equity schemes.
“We don’t see any tapering because the economy is doing well, the market is doing well. We don’t anticipate tapering,” he added.
Equity-oriented categories have seen consistent net inflows since March 2021 after the second wave of COVID-19 hit India and led to a correction in the markets. This underscored the positive sentiment among investors. Such schemes had previously experienced outflows for eight consecutive months from July 2020 to February 2021, losing £46,791m.
Within the equities segment, all categories saw net inflows for the period, with the multi-cap category being the largest beneficiary with a net inflow of ₹9,695 crore. Also, large and mid cap funds and large cap funds each experienced over ₹3,000 crore net infusion.
In the multicap category, a new fund – SBI Multi Cap Fund – was also launched, raising ₹8,170 crore. Also, the funds in this segment invest at least 25% each in large, mid and small-cap stocks, helping investors participate in growth across all three market segments, said Morningstar India’s Srivastava.
A falling market and turmoil around the world hasn’t stopped Indian investors from investing in the market through mutual funds. Their confidence in the market is evidenced by an amazing net inflow in March 2022,” said TradeSmart Chairman Vijay Singhania.
Amfi’s Venkatesh said: “The deteriorating geopolitical situation with the war between Russia and Ukraine, the heightened dovish stance of the US Federal Reserve Bank or even rising inflation due to the rise in fuel prices have not dented ongoing investor confidence in India’s growth story . Flows into retail programs continue to show monthly increases in fiscal 2022, led by rising SIP contributions which are at an all-time high of ₹12,328 crore for March 2022 and with the economy opening up due to the declining COVID prevalence in the country”.
In addition, SIP contribution collected monthly reached an all-time high of ₹12,328 billion, reflecting investors’ confidence in SIP as a tool and resilience to stay invested in the current market conditions. This also reflects that investors have renewed and invested in new SIPs for the next fiscal year.
In addition to equities, passively managed funds continue to attract a great deal of investor interest. During the month, 15 index funds and 5 other ETFs funds were launched, raising a total of ₹3,691 crore. But existing funds also continue to see strong net inflows. In March 2022, the index funds and other ETFs category received a net inflow of £19,219 billion.
However, the debt segment saw a net outflow of £1.15bn last month after registering a net inflow of £8,274bn in February.
Overall, the mutual fund industry saw a net outflow of ₹69,883 billion in March, compared to a net inflow of ₹31,533 billion in the previous month.
The outflow reduced the industry’s average assets under management (AUM) to ₹37.7 lakhcrore at the end of March from 38.56 lakhcrore at the end of February.
