Net inflows into equity mutual funds (MFs) have more than halved in March to Rs 66.6 billion from Rs 162.7 billion in February. The amount is also lower than that of March 2017 when the figure stood at Rs 82.16 billion, data by the Association of Mutual Funds in India (Amfi) shows. The data includes inflows into both equity funds and equity-linked saving schemes (ELSS).
Sundeep Sikka, executive director and chief executive officer, Reliance Nippon Life Asset Management, said some of this could be because of investors looking at booking profits ahead of the implementation of the long-term capital gains (LTCG) tax.
Investors who booked profits in March won’t have to pay a 10 per cent tax on the money made, although this is applicable only on gains exceeding the highest level on January 31 — the date set by the government for ‘grandfathering’.
Markets have been volatile since, and inflows tend to get hit during such periods, according to studies.
Regular investments, such as those coming in through systematic investment plans (SIPs), have not declined, Sikka said. “SIP flows remain the same,” he said.
ELSS saw higher inflows than other equity schemes. These are used for tax-saving purposes and generally see inflows towards the end of a financial year. In March, while net inflows into ELSS stood at Rs 37 billion, that into non-tax-saving equity funds was at Rs 29.54 billion against Rs 176 billion in February.
Equity assets under management (AUM), including assets under ELSS, stood at Rs 7.5 trillion, down 5 per cent from their peak of Rs 7.86 trillion in January. The Nifty index has come off 7.2 per cent from its record high of 11,130 touched in late January.
However, some debt funds witnessed net outflows. Liquid funds saw net outflows worth Rs 550 billion in March, while that from income funds stood at Rs 137 billion. There were net outflows of Rs 4.75 billion from gilt (government securities) funds.
The overall industry assets under management (AUM) stood at Rs 21.36 trillion, the March data shows.