Mutual Fund assets shy of Rs 20 lakh crore

Domestic investors pour Rs 12,727 crore into equity MFs in July

Unperturbed by record market levels, domestic investors poured in a whopping Rs 12,727 crore into equity mutual funds (MF) in July. This is the second-highest monthly inflow recorded by the industry. The average monthly inflows seen by equity schemes in the first half of 2017 was Rs 8,000 crore. For first time, the benchmark Sensex and Nifty had topped the 32,000 and 10,000, respectively, last month.

As of July 31, assets under management (AUM) of the MF sector stood at Rs 19.97 lakh crore, against Rs 18.96 lakh crore in June. Currently, equity AUM for the industry is at highest-ever level of Rs 7 lakh crore.

Experts said strong inflows into MFs will support the rally, even as valuations remain above long-term average.

If inflows into balanced funds, which typically invest 65 per cent in equity and rest in debt, are to be considered, the July inflow tally soars to Rs 17,000 crore. The highest monthly inflow of Rs 13,678 crore was in January 2008, the peak of the previous bull market.

These days, high inflows are not the function of levels of indices, but the increasing understanding about financial investments among Indians,” says Sundeep Sikka, chief executive of Reliance Nippon Mutual Fund.

“Most of the money is coming through systematic investment plans (SIPs), unlike the lump-sum investments during 2007-08. We will see more high inflows as equity is emerging as one of the most attractive propositions among investors,” he adds.

The mutual fund industry has over 14.5 million SIP accounts, which help the industry with sticky and consistent flows. The average monthly inflow through the SIP route this year has been Rs 5,000 crore.

The sector is aiming to increase its assets five-folds to Rs 95 lakh crore by 2025 while increasing the investor base to 13 million from the current 5.5 million.

A Balasubramanian, chief executive officer of Aditya Birla Sun Life Mutual Fund, who in 2014 estimated that the mutual fund sector would see its best period in the next five years, says, “It is a collective effort by all industry players. Our endeavour is to reach mutual funds across the country.”

Participation from smaller cities has been strong in recent years. The mutual fund industry has been receiving inflows from almost all parts of the country.

At a time when fixed deposits, provident fund, gold and real estate are turning unattractive, MFs are gaining traction.

Income funds in July saw inflows of Rs 60,000 crore, while balanced funds garnered Rs 7,864 crore. Gold funds continued to see net outflows. Put together, the month witnessed positive net inflows of Rs 63,504 crore after a consecutive month of outflows in April and May.

Money flows