Equity funds receive 8700 crore inflows in October

Equity funds received robust inflows of Rs. 8,700 crore in October, primarily due to higher gross sales of Rs. 17,250 crore on the back of a market correction, shows the latest AMFI data.

Experts say that a large part of this inflow has come in arbitrage funds due to improved spreads. The senior fund official from a large fund house said that his arbitrage scheme has received Rs. 1,200 crore inflow in October.

Net inflows/outflows in October

Source: AMFI. Rs. Cr.

In arbitrage funds, one can estimate the expected returns every month on the basis of spreads. Large investors like corporates and HNIs use this strategy to park money in arbitrage funds for short term.

If we take into account ELSS, ETFs and balanced funds, equity category has received net inflows of Rs. 13,700 crore in October. Vinod Jain of Jain investments says that investors who were waiting for correction have invested in equities in October. Another reason behind this healthy net inflow could be due to decrease in redemptions, he said.

Balanced funds continue to appeal to investors. AMFI data shows that net inflows in balanced funds stood at Rs. 3,385 crore in October. This is the highest monthly inflow this calendar year. Last year, in December, the industry received net inflows of Rs. 4,500 crore in balanced funds. One of the main reasons behind this trend could be the change in tax structure of debt funds.

Another healthy trend was observed in ETFs which track the equity indices. The category received inflows of Rs. 940 crore in October. Experts say that the participation of EPFO in equities through the ETF route has helped this category grow.

Overall, barring liquid and FOF investing overseas, all other categories received positive net inflows. As a result, the total assets under management of the industry went up from Rs. 15.80 lakh crore in September to Rs. 16.29 lakh crore in October, an increase of 3%.