Equity mutual funds saw a Rs 10,000 crores net inflow last month!

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This May 2021, equity mutual funds saw a net inflow of over Rs 10,000 crore, which is the highest infusion in 14 months owing to the rally in stock markets owing to declining COVID-19 cases and better earnings growth.

Before this infusion, equity schemes had regularly witnessed outflow for eight months from July 2020 to February 2021.

Gopal Kavalireddi, Head of research, FYERS, said that as the stock markets are at an all-time high, investors will prefer equity mutual funds and this trend will continue to grow.

Himanshu Srivastava, Associate Director, Morningstar India, said that improvement in the current situation, with increased recovery rate and several daily COVID-19 cases decreasing daily over the past few weeks, might have comforted the investors.

Positive earnings growth over the long-term, good quarterly results, reducing the risk of the severe impact of the second wave on the economy may have encouraged investors to look towards equities, he further added.

Inflow from equity and equity-linked open-ended schemes was at Rs 10,083 crore in May and was the highest inflow since March 2020, when a net infusion of Rs 11,723 crore was seen. (as per data)

Investors who saved money because of lesser spending and were just waiting at the sidelines, are now slowly investing due to strong returns in equities and market stability despite the second wave of the pandemic, said Arun Kumar, Head of Research at FundsIndia

Contribution in retail equity-oriented schemes continues to be upwards accompanied by net flows mainly in arbitrage, midcap, multicap schemes, and some diversification in Fund of fund schemes which invest in foreign equities, said N S Venkatesh, Chief Executive, AMFI, said. The overall industry AUMs are moving to a record high of Rs 33.05 lakh crore and 10 crore folios for the second month in this fiscal due to the increase in retail activity in the form of retail SIP Accounts, SIP AUMs, and SIP contribution, he added.

Major highlights of this infusion are:

  1. Equity-linked saving schemes (ELSS), saw a withdrawal of Rs 290 crore, last month.
  2. Multicap funds saw the largest net inflow at Rs 1,954 crore, followed by a net inflow of Rs 1,368 crore in midcap funds.
  3. Investors put in Rs 6,217 crore in hybrid funds in the month under review. This included Rs 4,521 crore in arbitrage funds.
  4. Contribution to systematic investment plans (SIPs) was impressive at Rs 8,819 crore in May compared to Rs 8,596 crore in April. Also SIP folios also increased to 3.85 crores at the end of May.
  5. Further, Gold exchange-traded funds (ETFs) witnessed a net inflow of Rs 288 crore last month, compared to Rs 680 crore in April, whereas investors withdrew Rs 44,512 crore from debt mutual funds
  6. Liquid funds saw the major outflow in the debt category to the tune of Rs 45,447 crore, followed by overnight funds at Rs 11,573 crore.

In totality, the mutual fund industry saw an outflow of Rs 38,602 crore across all segments compared to an inflow of Rs 92,906 crore in April.

The asset under management (AUM) of the mutual fund industry rose to the highest at Rs 33 lakh crore in May-end from Rs 32.38 lakh crore in April-end.

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