Equity mutual funds saw Rs 121 billion net inflow in May: AMFI

Inflow into equity schemes last month was Rs 121 billion, up 8 per cent over April, shows data from the Association of Mutual Funds of India (Amfi). This was still below the 12-month average of Rs 144 billion. 

Those in the sector say equity inflow has been holding up despite market volatility. While benchmark indices remained flat, the broader market mid-cap and small-cap indices had dropped as much as 8 per cent in May.

Sundeep Sikka, chief executive officer (CEO) at Reliance Nippon AMC, says in the current market environment, continued healthy contribution from systematic investment plans (SIPs) is an important indicator. 

On a year-on-year basis, monthly contribution from SIPs continue to rise. In April, this was Rs 67 billion, up 56 per cent over corresponding month a year before. SIP data for May is still awaited. “While there could be some slowdown in investments from HNIs (wealthy individuals), as they are more sensitive to market swings, a strong SIP book shows the market is maturing,” Sikka said.  

Alok Singh, head of investment at BOI AXA Investment Managers, says: “If SIP inflow continues to remain healthy, domestic institutional investors will eventually reach a point where they will be able to play a perfect counterbalance to foreign institutional investors, which will be good for markets and investors.”

At the end of May, equity assets under management (AUM) stood at Rs 7.98 trillion, a negligible decline over the previous month. Overall AUM, however, dropped to Rs 22.6 trillion from Rs 23.3 trillion in April.

Overall inflow for May was down Rs 500 billion, due to sharp outflow in debt-oriented schemes. Liquid funds saw net outflow of Rs 467 bn; the income fund category saw Rs 204 bn.

N S Venkatesh, CEO of Amfi, said net outflow in liquid funds was due to expiry of certain fixed maturity plans (FMPs). “There might be investors who have booked profits and are waiting on the sidelines for the right time to re-enter FMPs, as yields are rising,” he said.