For the last 14 months, the mutual fund industry has been witnessing net inflows in equity funds, finds ICRA.
AMFI data shows that equity funds including ELSS witnessed net inflows of Rs.10,739 crore in May. “This is the highest net inflow in the equity mutual fund category since June 2015 and marks the 14th straight month of net inflows,” said ICRA’s note sent to Cafemutual.
The rating agency has attributed this to robust equity markets, which reached all-time high in May, and constant inflow of investments through the SIP. This comes on the top of over Rs.70,000 crore investments in equities in FY2017. The inflows are an indication that Indians are slowly but steadily moving from physical to financial savings, said ICRA.
Another positive trend that the company pointed out is growing popularity of liquid funds among retail investors. The company said, “Liquid funds are viewed as a category for corporates and HNIs to park their surplus cash, but the recent industry data suggests that retail investors too are actively putting their money in this category. In the last five financial years, the retail AUM of liquid funds has increased by close to seven times. In the same period, the folio count has grown fourfold.”
On the penetration of mutual funds in hinterland, the company said that assets from B15 towns have grown 47% due to investor-friendly initiatives by regulators and campaigns by AMCs. B15 assets grew by Rs.1.09 lakh crore and stood at Rs.3.41 lakh crore compared to Rs.2.32 lakh crore in May 2016. Currently, B15 accounts for 18% of the total assets of the MF industry.
Overall, the MF industry may take some more time to touch Rs.20 lakh crore mark due to outflows from liquid funds in May. “The industry AUM still remains within a striking distance of the Rs.20 lakh crore milestone, which it is likely to achieve in the first half of FY2018,” said the company.