January 8, 2017
New Delhi: Equity mutual funds saw an inflow of more than Rs 10,000 crore in December, making it the highest in 18 months, underpinned by investor optimism.
This also marks the ninth straight month of positive inflow in equity schemes. Prior to that, such funds had witnessed a pullout of Rs 1,370 crore in March.
Market experts attributed the inflow to positive climate and optimistic environment in both equity and debt segments.
Also, monthly net contributions through SIP (systematic investment plans) led to higher positive net inflows in equity markets, they added.
"The running SIP volume of about Rs 3,900 crore a month is a major support for fresh flows in the markets," Bajaj Capital National Head Mutual Funds Anjaneya Gautam said.
SIP is an investment vehicle that allows investors to invest in small amounts periodically instead of lumpsums. The frequency of investment is usually weekly, monthly or quarterly.
According to data from Association of Mutual Funds in India (Amfi), equity funds, which also include equity-linked saving schemes (ELSS), registered a net inflow of Rs 10,103 crore last month.
This is the highest net inflow since June 2015, when equity MFs racked up an inflow of Rs 12,273 crore. In November, the net inflow stood at Rs 9,079 crore.
With the latest inflow, total mobilisation in equity schemes has reached close to Rs 51,000 crore in April-December of the current financial year.
The robust inflow has pushed up assets under management (AUM) of equity MFs to Rs 4.7 lakh crore at the end of December, from Rs 4 lakh crore in April-end.
"Despite market being weak since November 2016, equity AUM has recovered due to fresh investments by investors. As we still have three months to end the current financial year, we may close the year with the highest-ever equity and overall AUM in mutual funds," Gautam said.
"Investors' interest is continuously growing in equity investments. It is right time to cash in on the opportunity, which has come after demonetisation announcement, the US elections and the US central bank action on their interest rates."
The outflow meant asset under management (AUM) of equity funds rising to 4.7 lakh crore.
Gautam believes that the ELSS category will see higher inflows between January and March 2017 because investors will be looking forward to tax-saving options. ELSS, with attractive market valuations, is making a strong case for fresh investments.
Mutual funds are investment vehicles made up of a pool of funds collected from a large number of investors. The funds are invested in stocks, bonds and money market instruments, among others.