Equity funds net inflows hit Rs 1.64 trn in FY22 on mkt surge, steady SIPs

Record net inflows of Rs 28,463 crore in March

Equity mutual funds (MFs) saw net inflows of Rs 1.64 trillion in 2021-22 (FY22) compared to net outflows of Rs 25,967 crore seen in the preceding financial year. Increase in net equity inflows were helped by surging equity markets coupled with investors' steady participation through systematic investment plans (SIPs) and success of new fund offers (NFOs).

In March, equity funds saw record net inflows of Rs 28,463 crore. In FY22, there were a total three months when equity funds logged monthly inflows in excess of Rs 20,000 crore. In July and December, equity funds had seen net inflows of Rs 22,583 crore and Rs 25,082 crore respectively.

“Equity oriented categories have been witnessing consistent net inflows since March 2021, after the second wave of Covid hit India and resulted in the correction in the markets. Despite concerns, the growth outlook over the long-term has remained strong which has helped maintain positive sentiment among investors. Also, the perception that despite intermittent corrections the markets would continue to surge have prompted many investors to make the most of the dips in the markets and invest,” said Himanshu Srivastava, associate director – manager research, Morningstar India.

In the last five financial years, equity funds have seen net inflows of more than Rs 1 trillion on three occasions. In the financial year, 2017-18 and 2018-19 equity funds had seen net inflows of Rs 1.71 trillion and Rs 1.11 trillion respectively. These numbers include net inflows into equity as well as equity linked saving schemes (ELSS).

Even the average assets under management (AAUM) of the MF industry stood at Rs 37.70 trillion as of March compared to Rs 32.17 trillion a year ago, a growth of around 17 per cent.

In the last 12 months, the MF industry has added 10.9 million unique investors which is also reflective of investor confidence in the mutual fund asset class.

“The deteriorating geo-political situation with Russia-Ukraine war, elevated hawkish US Fed stance, or even the rising inflation owing to spurt in fuel prices has not deterred continued investor confidence in the India growth story,” said N S Venkatesh, chief executive of Amfi.

In FY22, inflows through the SIP route stood at Rs 1.24 trillion compared to Rs 96,080 crore in 2020-21. In March, inflows through SIP recorded a new high of Rs 12,328 crore.

Apart from SIPs, NFOs too have helped the industry garner higher flows. In March, the NFO of SBI Multicap Fund raised Rs 8,170 crore. In the last financial year equity funds collected around Rs 53,500 crore through various NFOs.

In March all the categories of equity funds saw net inflows, while debt funds saw net outflows of Rs 1.14 trillion. These outflows were led by high redemptions in liquid and overnight funds.

“On the fixed income schemes, quarter-end advance tax allocations and uncertainty over expected reversal in RBI stance has led to flows turning into overall negative zone,” added Venkatesh.

MF industry expects positive inflows into equity funds to continue underpinned by the strong SIP book.