Equity schemes see Rs 5,400-cr inflow in Aug

Investor interest in equity mutual fund (MF) schemes continued to remain high in August. Fund houses saw net inflows of nearly Rs 5,400 crore last month, adding to around Rs 20,000 crore worth of inflows in the three months to July.

The pace, however, was less than in July, when equity schemes saw inflows of a massive Rs 10,800 crore, the highest in a little over six years.

Sector officials said inflows continue to remain robust and attributed the sharp drop over the previous month to JM Financial's arbitrage scheme, which alone had garnered close to Rs 5,700 crore from companies in July. They said investor sentiment continued to remain strong towards equity offerings. Also, some were said to have redeemed their investments, cashing in on the sharp rise in the market this year.

"Sentiment on the ground has clearly shifted and we do expect flows to be reasonably robust in the coming months as well," said Ajit Menon, executive vice-president, DSP BlackRock MF.

The benchmark indices, Sensex on the Bombay Stock Exchange (BSE) and the National Stock Exchange's Nifty, have gained nearly 30 per cent so far in 2014. The broad-based small-cap and mid-cap indices of the BSE are up around 60 per cent and 50 per cent, respectively.

Redemptions during August were Rs 4,600 crore. Gross sales were Rs 10,340 crore, compared to Rs 17,634 crore in July and Rs 12,368 crore in June.

"There are still investors stuck since 2007-08. During the current rally, they redeemed units and booked profits. At the same time, there are a lot of investors who are willing to put in fresh money as well," said D P Singh, executive director & chief marketing officer (domestic business), SBI MF.

There is a marked rise in the number of equity new fund offers so far this year. Since the beginning of this calendar year, there have been 40 of these, raising a total of Rs 4,800 crore, the highest since 2008.

The majority of these new launches are close-ended products. In August alone, seven were launched, mobilising assets worth Rs 1,230 crore. This was the highest for a month since the 2008 market crash.

The improvement in sentiment is reflected in the steady rise of equity portfolios. Since May, 220,000 new ones have been added. These had earlier seen a sharp decline since 2011, from a peak of 40.1 million to 29.1 million.