After negative net inflows (more money went out than came in) in the calendar years of 2012 and 2013, investors have been steadily and increasingly investing in equity mutual funds. But in 2017, according to Association of Mutual Funds in India (Amfi), equity funds have seen a massive net inflow of Rs1.46 trillion, the highest in the history of mutual funds in India. After having risen just 2% in 2016, the S&P BSE Sensex has already risen 25% this year.
Did demonetisation push investors to invest in mutual funds, or have inflows come in only because equity markets have risen consistently in the recent past? Most industry experts said the surge in inflows is the outcome of a combination of factors, including demonetisation. “Demonetisation, definitely, helped people move money from tijoris (safes) to bank accounts and from there to mutual funds. But regulatory framework and distributor network has also played a solid role,” said Nilesh Shah, chief executive officer, Kotak Mahindra Asset Management Co. Ltd.
