SIP, equity inflows drop for 2nd month; overnight, credit risk funds see pressure

NEW DELHI: Inflows into equity funds and SIPs contracted further while debt funds saw stable inflows in May amid wild market volatility. As per Association of Mutual Funds in India (Amfi) data released on Monday, SIP inflow fell 3 per cent to Rs 8,123.03 crore in May from Rs 8,376.11 crore in the previous month.

Total number of SIP folios saw a marginal jump to 3.16 crore from 3.14 crore. Assets under management (AUM) from SIPs remained flat at Rs 2.76 lakh crore.

“Overall, the industry is holding up. It has been able to weather the Covid storm and market volatility. Retail investors continue to repose trust in the industry, which was evident from the SIP contribution of over Rs 8,000 crore mark ” said N Venkatesh, Chief Executive at Amfi.

Net inflows into equity mutual funds, which were at Rs 6,212.96 crore in April, dipped further to Rs 5,256 crore in May. Largecap funds saw decent inflows at Rs 1556 crore while flow to midcap and smallcap funds dropped and were about Rs 300 crore each.

The dip in inflows have come at the time when benchmark indices were more or less flat. Sensex dropped 3.83 per cent in May while BSE Midcap also fell 1.41 per cent and the Smallcap index 1.88 per cent amid multiple rounds of easing of lockdown during the month.

Drop in inflows, however, did not impact the DII buying during May as domestic institutional investors that largely constitute mutual fund houses bought shares worth Rs 11,356 crore. This is in contrast to the selling of shares worth over Rs 800 crore in the previous month.

Amfi data showed that there was a net inflow of Rs 70,813 crore in mutual funds largely on accounts of investors pouring money into liquid funds. Liquid funds saw an inflow of Rs 61,870.87 crore while overnight fund and credit risk funds saw outflows of Rs 15,880.91 crore and Rs 5,173 crore as investors continued to withdraw money from the risky fund categories following the closure of six funds by Franklin Templeton.

Venkatesh said it is the right time for people to invest in debt, especially in AAA-rated debt. He said concerns over the credit risk funds are over as redemptions have come down sharply in the fund category.

Total assets under management (AUM) at the end of May jumped to Rs 24.54 lakh crore from Rs 23.93 lakh crore. Gilt funds, banking funds and PSU funds saw healthy inflows as people moved to relatively safer categories.