Equity inflows increase, despite fall in industry AUM

Equity inflows continued with their dream run as investors continue to invest in equity funds despite volatile markets. AMFI’s latest data shows that the mutual fund industry witnessed net inflows in equity funds, including pure equity funds, balanced, ELSS and equity ETFs, close to Rs.22,240 crore in February.  It registered an increase of 6.85% from Rs.20,821 crore in January.

In February, pure equity funds were the only equity category to witness increase in net inflows. The net inflows in the category increased by Rs.1,279 crore to reach Rs.14,683 crore in February.

Experts attributed this to the inflows through SIPs.

Balanced funds that gained traction in 2017, witnessed a marginal fall in inflows for the second consecutive time. The net inflows of balanced funds was Rs.5,026 crore, down from Rs.7,665 crore in January.

Vidya Bala, Head of Mutual Fund Research, Fundsindia, attributes this to the proposal of dividend distribution tax. “It is a clear effect of the proposal of the introduction of dividend distribution tax in equity funds. Balanced funds gave regular dividends that made investors think that they are income-generating funds. Many investors invested in balanced funds to get regular dividends,” Vidya said.  

Inflows to ELSS funds also decreased marginally. The net inflow to ELSS funds was Rs.1,585 crore in February. Vidya believes this marginal fall in inflows in ELSS is due to the fact that most employees have already submitted their investment proof in January.

Overall, the AUM of total equity funds was Rs.10.21 lakh crore. The equity assets decreased by Rs.14,712 crore or 1.42% in the month due to mark-to-market losses. The equity markets tumbled after the Budget reintroduced long-term capital gains tax. BSE Sensex lost 1,781 points or 4.95% in February.

The total industry AUM was Rs.22.2 lakh crore in February.

   Monthly inflows/outflows and AUM as on February 2018

Source: AMFI