MF equity flows below one-year average for third straight month

Equity inflows for mutual funds stood at Rs 121 billion in May. While the inflow tally is strong, it is 20 per cent below the previous 12-month average of Rs 145 billion. In fact, this is the third straight month when the inflow has been below the one-year average. The average monthly inflow for the second half of 2017 was Rs 174 billion.

In comparison, the monthly average in 2018 has been 30 per cent lower at Rs 123 billion. Last year, the markets saw a secular up move, with the benchmark Sensex gaining 28 per cent and broader market BSE Small and BSE Midcap indices rising 48 per cent and 61 per cent respectively.

This year, the market trend has been choppy. In a year to date basis, the Sensex is up 4 per cent, BSE Midcap down 10 per cent and BSE Midcap index is down 12 per cent. Industry players say given the volatility, inflows are holding up well.

Flows are also supported by the sticky inflows of close to Rs 70 billion coming through the systematic investment plan (SIP) route. Due to the weakness in the broader market, many investors are stopping their lumpsum investments but continuing with their SIPs, said a top official.