Sustaining positive momentum for the 14th straight month, equity mutual funds attracted a net sum of Rs 15,890 crore in April amid heightened volatility in stock market and consistent selling by foreign portfolio investors.
This was much lower compared to a record net inflow of Rs 28,463 crore seen in the preceding month, data from the Association of Mutual Funds in India (AMFI) showed on Tuesday.
The lower quantum of net inflow from the previous month could be attributed to investors going slightly cautious given the ongoing challenges to the investment environment, Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, said.
Akhil Chaturvedi, Chief Business Officer, Motilal Oswal AMC, said that it will be interesting to see ongoing investment trends, given the intensity of volatility being very high, and expect positive trend to continue going forward though.
Equity schemes have been witnessing net inflow since March 2021, after the second wave of COVID-19 resulted in the correction in the markets, highlighting the positive sentiment among investors.
Prior to this, such schemes had consistently witnessed outflows for eight months from July 2020 to February 2021, losing Rs 46,791 crore.
All the equity-oriented categories received net inflows in April with sectoral/ thematic funds category being the biggest beneficiary with a net inflow of Rs 3,843 crore. The segment also saw a launch of a new fund -- ICICI Prudential Housing Opportunities Fund, which mobilised Rs 3,130 core.
This was followed by large- and mid-cap fund and that witnessed over Rs 2,000 crore net infusion.
"Despite volatility in markets and fear around macros both globally and locally, it is good trend to see continued positive flows in equities. Though lower than last month, which may be due to NFO allotment, SIP flows are holding strong, which is also very positive," Chaturvedi said.
Monthly SIP (Systematic Investment Plan) contribution dropped to Rs 11,863 crore in April compared to Rs 12,328 crore in March.
However, the number of SIP accounts stood at all-time high in April at 5.39 crore. During the month under review, 11.29 lakh SIP accounts were added.
Apart from equities, the debt segment saw a net inflow of Rs 69,883 crore in April after witnessing a net outflow of Rs 1.5 lakh crore in the preceding month.
Also, gold exchange traded funds experienced a net inflow of Rs 1,100 crore in the month under review.
Overall, the mutual fund industry registered a net inflow of Rs 72,846 crore last month as compared to a net withdrawal of Rs 69,883 crore in March.
"It has been a good start to new fiscal (FY23) with net flows for overall mutual funds schemes in the positive territory and continued positive equity flows for consecutive 12 months. Despite market volatility in April 2022, retail investor trust on mutual fund asset class continues to be strong," N S Venkatesh, Chief Executive, AMFI said.
The inflow pushed the average assets under management of the industry to an all-time high of Rs 38.89 lakh crore at the end of April from Rs 37.7 lakh crore at March-end.
Going forward, mutual fund investors continue with their SIP mode of investments on equity side, and reallocate their savings in debt funds more towards shorter duration schemes owing to recent hike in rates by RBI, Venkatesh said.