Volatility is helping the industry attract investors. From 26,559 levels at the start of December, the Sensex fell 3% to 25,807 on December 26, presenting an opportunity for savvy investors to enter equity.
The latest AMFI data testifies to this trend. In December, equity funds received net inflow of Rs. 9,196 crore. Encouragingly, a predominant share of the flow has come in pure equity funds (not arbitrage), say fund officials. “Arbitrage funds have not received much inflow in December. We have seen good inflow in pure equity category,” says D P Singh, ED & CMO (Domestic Markets), SBI MF.
| Category | Net inlfow/outflow | AUM |
| Equity | 9,196 | 4,19,562 |
| Balanced | 3,947 | 64,954 |
| ELSS | 907 | 50,113 |
| Other ETFs | 4,349 | 28,834 |
| Income | -33,182 | 7,48,071 |
| Liquid | 26,943 | 3,08,731 |
| Gilt | -1,190 | 16,937 |
| Gold ETFs | -26 | 5,519 |
| FOF overseas | -21 | 1,760 |
| Total | 10,923 | 16,44,481 |
| Source: AMFI Rs. cr | ||
About Rs. 3,500 crore comes from SIPs every month which is helping the category grow. On an annualised basis, this works out to Rs. 42,000 crore inflow. Sustained inflow helped equity funds receive Rs. 45,781 crore net inflow year to date (YTD), shows AMFI data.
“Despite market being weak since Nov 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 highest ever equity and overall AUM in mutual funds. Investors' interest is continuously growing in equity investments. It is right time to cash in the opportunity, which has come after demonetization announcement, US elections and US Central Bank action on their interest rates,” says Anjaneya Gautam - National Head - Mutual Funds, Bajaj Capital.
Interestingly, the industry does not have to rely on NFOs to shore up its equity assets. Three equity funds launched in December collected Rs. 635 crore. The remaining Rs. 8,561 crore came in existing funds.
If we take into account inflow in balanced funds (Rs. 3947 crore), ELSS (Rs. 907 crore) and equity ETFs (Rs. 4,349 Rs. crore), the combined inflow in equity category crossed Rs. 18,000 crore in December. The equity AUM of the industry has now reached Rs. 5.63 lakh crore (including balanced, ELSS and equity ETFs).
Due to huge outflows (Rs. 33,182 crore) from income funds, the industry’s AUM fell marginally from Rs. 16.50 lakh crore in November to Rs. 16.46 lakh crore in December. Dwijendra Srivastava, CIO – Debt, Sundaram Mutual Fund says that the RBI’s unexpected move to keep the policy rates unchanged caught investors off guard. “Investors have moved out of medium term and dynamic bond funds to liquid funds,” says Srivastava.
