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Net inflows into equity mutual funds slow down on month in July

Informist, Monday, Aug 8, 2022


MUMBAI – Inflows into open-ended equity schemes of the mutual fund industry slowed down in July on a monthly basis, with the category seeing net inflows to the tune of 89 bln rupees, compared with 155 bln rupees in June, according to data by the Association of Mutual Funds in India.


“It cannot be termed as a trend, the only thing I could say is that the market was hugely volatile, so maybe because of that some people are looking for the right time for the entry through the mutual fund route,” said N.S. Venkatesh, chief executive of the industry body.


However, assets under management of open-ended equity funds were up sharply by 10% month-on-month at 14.2 trln rupees as on Jul 31 on account of gains in domestic equity markets. 


According to the data, the mutual fund industry saw net inflows of over 236 bln rupees, against net outflows of 698.5 bln rupees the previous month.


Assets of the industry were up nearly 6% month-on-month at 37.7 trln rupees as at the end of July.


All categories of open-ended equity schemes saw net inflows during the month, with small-cap funds seeing the highest net inflows of 17.79 bln rupees, followed by flexi-cap, and mid-cap funds at 13.82 bln rupees and 12.45 bln rupees, respectively.


“We believe that the equity markets will do well despite rate hikes because people will understand that the rate hikes are for the containment of inflation,” Venkatesh said. In July, benchmark equity indices had risen around 8.5%, which reflect in the growth in equity assets.


Inflows through systemic investment plans stood at 121.4 bln rupees in July, against 122.76 in June. Assets of systemic investment plans were at 6.1 trln rupees as on Jul 31, compared with 5.51 trln rupees a month ago.


Open-ended debt funds witnessed net inflows of 49.3 bln rupees in July compared to net outflows of 922.5 bln rupees in June. Assets under management of debt funds were up 1% on month at 12.5 trln rupees as at the end of July.


Overnight funds, which saw net inflows of 199.19 bln rupees, contributed majorly to the net inflows to debt funds.


Venkatesh said segments such as various duration funds saw net outflows, as investors pulled out their investments due to underperformance of these schemes because of a rise in bond yields.  


Open-ended hybrid schemes recorded a net outflow of 51.5 bln rupees, mainly contributed to by arbitrage funds, which saw net outflows of 64.1 bln rupees in July.


“The arbitrage fund is constantly seeing outflows because the futures and spot levels are not that attractive”, Ventakesh said.


In July, fund houses garnered 14.5 bln rupees from nine schemes that were launched, the data showed.  End


Reported by Kshipra Petkar

Edited by Avishek Dutta


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Source: Cogencis

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