Equity MFs see 21-months high net inflows

It was in September 2011 that industry could see high inflows in equities

After a long wait for tide to turn, India's equity mutual funds have seen the highest net inflows over the last 21 months in June. The month was full of volatility wherein benchmark indices had lost about 6% at one point of time before bouncing back.

The overall net inflows in equity schemes (including equity linked saving schemes or ELSS) stood at Rs 872 crore, according to the latest statistics from industry body Association of Mutual Funds in India (Amfi).

It has come as big relief for the fund industry which had been witnessing redemptions for 15 of last 21 months. There were months when net outflows from equity even surpassed a whopping Rs 3,500 crore.

Last when the sector could see high inflows was in September, 2011 when inflows stood at Rs 1,440 crore. However, later, barring one occasion, the segment never could manage to see positive inflows of more than Rs 500 crore.

Industry's executives had indicated that the month could turn out to be different as redemption requests were less and fresh money was being  pumped in. But, considering the heavy outflows, month-on-month, they could not muster courage to say that industry would be net positive.

According to Deepak Chatterjee, managing director and CEO of SBI Mutual Fund, "There have been flows in equity segment last month. Fresh money from new investors too has come."

This was also clear from the sharp decline in net selling of shares by equity fund managers last month. For the month, industry sold shares worth Rs 100 crore which was one the lowest in last 15 months and far lesser when compared with the immediate previous month where it stood at above Rs 3,500 crore.

Jaideep Bhattacharya, CEO of Baroda Pioneer Mutual Fund, said, "Last month was better than the first two months of the (June) quarter, though it was not drastically better. Redemption pressure in equities have come down."

The high inflows came during a month when the benchmark indices were quite volatile. Especially, in the last few trading sessions of the month the indices had dipped over 6% before recovering. "It appears that investors made good use of the sharp correction in the markets and entered," said national sales head of a private-bank sponsored AMC.

However, industry executives remained cautious about the sustainability of the latest trend. "It will be too early to say whether industry would continue to see higher inflows in equities," he added.

Monthly net inflows in equity schemes* in last one year

Month	Net inflows (Rs crore)
Jul '12	- 949
Aug '12	- 2,286
Sept '12	- 3,559
Oct '12	- 1,984
Nov '12	- 1,525
Dec '12	- 1,718
Jan '13	- 2,690
Feb '13	- 163
March '13	+ 768
April '13	- 270
May 13'	- 3,357
June '13	+ 872

<sup>* Includes ELSS

Source: Association of Mutual Funds in India (Amfi)</sup>