Investors come back to equity mutual funds after eight months, shows AMFI data

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Equity mutual funds saw net inflows (investments exceeding redemption) of Rs 9,115 crore in March 2021. Net inflows in equity schemes are seen after eight consecutive months.

Among equity funds, sectoral funds and equity-linked saving schemes (ELSS) popularly known as tax-saving mutual funds got inflows of Rs 2,009 crore and Rs 1,552 crore, respectively, as per data released by Association of Mutual Funds in India (AMFI). These categories saw highest inflows in March among equity funds. Inflows in ELSS were on the expected lines, as towards the end of financial year, many individuals prefer to invest in them to save tax.

“While it’s too early to make any conclusions, it seems like equity investors waiting on the sidelines for a market correction, have started making allocations taking a long-term investing view on equities, as should be the case. Additionally the quantum of redemptions were lower for the month, suggesting profit booking/reallocation to other asset classes slowed down,” says Kaustubh Belapurkar, Director – Manager Research, Morningstar India.

Investors reinforced their faith in systematic investment plans (SIP), which are primarily used to invest in equity funds. Contribution through SIP went up to Rs 9,182 crore in March compared to Rs 7,528 crore in February 2021.

Number of SIP accounts outstanding increased to 3.72 crore in March compared to 3.62 crore in February.

Bond funds saw net outflows of Rs 52,528 crore. The redemptions are attributed to the end of quarter fund requirements of corporates. Liquid funds and low duration funds saw the maximum redemptions – Rs 19,383 crore and Rs 15,847 crore, respectively. Overnight funds; however, saw net inflow of Rs 5,027 crore.

Banking and PSU Bond Funds saw net outflows of Rs 6,508 crore as compared to net outflows of Rs 1,658 crore in February 2021.

Hybrid funds saw net inflows of Rs 6,210 crore in March compared to Rs 4,702 crore in previous month. Balanced advantage funds saw net investments of Rs 2,711 crore as compared to Rs 2,005 core in February. Hybrid funds invest in varying mix of stocks, bond and gold as per mandate of the scheme.

Falling gold prices have attracted investors to gold ETFs. These schemes saw net investments of Rs 662 crore in March as compared to Rs 491 crore in previous month. “Safe haven demand along with other factors may have caused some inflows in gold ETF,” says NS Venkatesh, Chief Executive, Association of Mutual Funds in India.

Total assets under management for the mutual fund industry stood at Rs 32.17 lakh crore as on March 31, 2021 as compared to Rs 32.29 lakh crore as on February 28, 2021.