In September, equity oriented mutual funds received a net inflow of Rs 8,677.42 crore, which was the seventh consecutive month of net inflows. Since March this year, equity funds have received a net inflow of Rs 68,551.24 crore, thus indicating towards positive sentiment among investors. Mutual fund monthly SIP contributions breached Rs 10,000 crore milestone for the first time ever and industry AUMs touched all time high at Rs 36.73 lakh crores is historic.
Himanshu Srivastava, Associate Director â€“ Manager Research, Morningstar India, said that positive sentiments and rally in the equity markets continue to attract investors into equity-oriented mutual funds. “Relatively lower returns from traditional investments have also made equity mutual funds attractive investment destination for investors. Additionally, with the SIP book growing consistently, equity oriented funds have been receiving robust flows.”
Equity oriented NFOs continue to attract investors thus garnering robust flows. During the month five equity oriented NFOs were launched which combined collected around Rs 6,579 crore, thus significantly contributing towards the net inflows.
Passively managed funds continue to attract investors’ interest on the back of sharp rally in the equity indices. Index funds and other ETF category recorded a net inflow of Rs 10,764 crore in September. What also added to the net inflow were four NFOs, two each in Index and other ETF category, which collected Rs 1,211 crore.
With all the segments of the market â€“ Large, mid and small-caps doing well, expectedly, multi-cap category was the biggest beneficiary during the month, followed by focussed and flexi-cap categories.
Give the quarter end, Debt oriented funds, prominently with less than one-year maturity, witnessed net outflows, largely on account of advance tax payment in September. Overall, the segment witnessed a net outflow of Rs 63,910.23 crore, led by significant net outflows from liquid, ultrashort, low duration and money market categories.
“The expected return from equity remains higher than debt funds with a pause in reduction of interest rates by the RBI due to increased CPI inflation, amongst other reasons. Investors obviously see a better risk-return ratio by investing in equity funds and the churn is inevitable,” notes Waqar Naqvi, CEO at Taurus Mutual Fund.
Categories such as Medium Duration and Medium to Long Duration received net inflows thus indicating investors preference for fixed income funds at short to medium end of the curve. Credit funds continued to witness inflows on the back of improvement in scenario on the fixed income side. Lastly, Floater funds continue to receive net positive flows given the limited probability of interest moving down significantly. With a net inflow of Rs 5,814.04 crore, it was the biggest beneficiary in September among the debt-oriented categories.
It is also very encouraging to see much better inflows in dynamic/balance advantage funds as in current times of rising markets and premium valuations, this category of funds will allow to control risk of investors much more efficiently,” said Akhil Chaturvedi, Head of Sales & Distribution, Motilal Oswal AMC.
The good news on the SIP front continues with monthly input value finally crossing Rs 10,000 crore in September. “This is heartening as this is a significant jump from Rs.8,000 the SIP book had shrunk to a year back. This clearly highlights improving appetite from retail as well as HNIs,” points out Aashwin Dugal, Co Chief Business Officer, Nippon India Mutual Fund.
Commenting on the September 2021 monthly data, N S Venkatesh, Chief Executive, AMFI said: “Retail investors are preferring Mutual Funds, over low-yielding traditional savings avenue like Bank FDs, and also Gold and Real Estate. On the back of rapidly improving economic scenario aided by conducive RBI policy and easing of Covid related restrictions, equities asset class would continue to deliver superior risk adjusted returns.”