Record inflow for equity mutual funds in FY16

Equity schemes see highest-ever net inflows of Rs 74,000 cr last fiscal despite 10% fall in market

Despite turbulence in the secondary market in 2015-16, equity mutual fund (MF) schemes saw the highest-ever inflow from investors at Rs 74,000 crore. This was despite the benchmark indices ending the financial year with 10 per cent loss. The previous record was Rs 71,000 crore in 2014-15.

The bulk of the flows into equity schemes are from retail (small) investors. They've continued trusting equities despite the market seeing a sharp bout of correction, particularly in January and February, when the benchmark indices came off nearly 15 per cent. Nimesh Shah, managing director, ICICI Prudential MF, said: “It is a good sign that investors are not perturbed by volatility. Investors are showing maturity by remaining invested and also incrementally buying when the market is correcting. We expect the momentum of inflows to continue.”

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Another reason for the flow into the equity segment is a less promising outlook in the other traditional venues of investment, including real estate and gold.

Milind Barve, managing director of HDFC MF, who has long been advocating equity as an asset class, said: “There is no reason why there will be no rise in inflows in equity inflows. For the long term, equity looks the best asset class.”

The year 2015-16 turned out to be a consecutive year of very strong flows. Put together, nearly Rs 1.45 lakh crore of investors' money found its way into equity MFs over the past two financial years.

Worryingly, flows have been moderating over the past few months. In fact, in March, equity schemes registered outflow of Rs 1,300 crore. Those in the sector, however, don’t see this as an alarming signal. According to them, investors' faith in equity looks restored over recent years.

Currently, funds offer 473 equity related schemes (diversified and equity-linked savings scheme funds) to investors, managing assets worth Rs 3.86 lakh crore.