Half yearly point of the current financial year ended on a mixed note for the industry. While the industry has witnessed large scale redemption in debt funds, investors continue to put their faith on equity funds even as the market fell by record numbers.
In the month gone by, large-scale redemptions in liquid funds to the tune of Rs. 2.11 lakh crore resulted in a sharp decline in industry AUM, shows the recent AMFI data. Typically, corporates redeem their liquid fund investments every quarter for advance tax payments and profit booking. The current liquidity crunch post the IL&FS event has also fuelled additional redemptions in liquid funds, say experts.
Income funds too reported major outflows to the tune of Rs. 32,504 crore during the month. The RBI expectation of rate hike in October and the recent credit event are factors ailing this category in the last few months.
On a positive note, despite the recent fall in Sensex equity inflows continue to remain robust. The industry recorded net equity inflows to the tune of Rs. 14,312 crore in the month of September. N.S Venkatesh, Chief Executive, AMFI said that the inflows in equity funds is largely due to retail participation. This is evident from the SIP inflows, which has grown to Rs.7,727 crore in September 2018.
Equity funds comprise pure equity, ELSS, balanced and ETFs that track indices.
While the industry recorded a dip in the month-on-month AUM, the trend over the last one year continues to be positive. “The quarterly average AUM for the quarter ended September 2018 shows a Y-o-Y growth of 16%,” said Venkatesh, in the press release.
Along with positive trend in equity investments, the folio growth continues to remain robust. According to AMFI, the total folios now stand at 7.75 crores growing by 26% annually. The strong folio growth and continued retail participation in equity funds shows that mutual funds continue to be the preferred investment vehicle of retail investors, said AMFI.