Amidst a renewed turmoil in debt funds space, thanks to concerns around corporate debt issuers, the open-ended debt funds as a whole saw over 40% drop in net inflows in May at Rs 70,119 crore. This is primarily due to outflows in low, short, medium durations funds and credit risk funds. On the other hand, equity funds held their fort. Climbing from a multi-year low in April, equity funds clocked 17% rise in net inflows, thanks to mid cap, small cap and focussed funds.
Total assets under management rose to Rs 25.93 lakh crore in May, up 4.6% from April. Total net inflows stood at Rs 76,989.81 crore, down 23.3% from April figure of Rs 1 lakh crore.
Though the problems around DHFL did not rear their ugly head in May 2019, the discomfort around debt funds has been clear. Liquid funds have reported the usual corporate and treasury inflows at over Rs 68,500 crore and money market funds at nearly Rs 3,900 crore. But, the problem is elsewhere. So-called safe debt funds like low duration, medium duration, medium to long duration, dynamic bond and credit risk all posted outflows. As a sub-category, gilt funds saw more money flowing out than coming in.
Take a look below at the position of the net outflow in debt funds in May 2019.
Equity funds flows
In the open-ended equity space, May was a big month. After election results at the end of the month, markets have jumped with joy. Out of the 10 equity sub-categories, 9 reported positive flows (net inflows). Small cap funds garnered over Rs 1,400 crore in May compared to Rs 955 crore in April. Midcap funds saw net inflows in April at Rs 491 crore zoom to nearly Rs 1,300 crore in May. Many reckoned that small and mid caps are better placed in terms of valuations compared to large cap funds. So, the jump in small and mid cap funds can be attributed to this reason. Focussed equity funds saw a big jump and collected Rs 1,200 crore in May. ELSS funds saw healthy Rs 516 crore inflows, higher than Rs 459 crore in April.
The only equity fund category that saw net outflows was dividend yield funds. Do note that the net inflows in multi cap funds have come down quite a bit in May compared to April. Nearly Rs 1,900 crore flowed into multi cap funds in April, but in May this number fell sharply to Rs 650 crore i.e. almost one-third.
Importantly, the monthly SIP book clocked yet another month of over Rs 8,000 crore in May. Commenting on the May 2019 monthly Mutual Fund data, N S Venkatesh, CEO, AMFI said: “Continued retail investor confidence through SIPs has now set a new normal with monthly flows consistently crossing over INR 8,000 crore. On the debt side, investors can take advantage of declining interest rates to invest in Gilt and high-quality income funds. The retail fund flows would now hereon, further strengthen on the back of political stability, promise of further economic reforms and improving macro-economic environment coupled with healthy corporate earnings growth.”
Take a look below at the position of the net outflow in equity funds in May 2019.
Lastly, the picture in hybrid schemes does not seem to be improving. After clocking net outflows for hybrid fund category in April, May saw Rs 1265 crore in hybrid schemes, but most of this money was in arbitrage funds while balanced/aggressive hybrids saw nearly Rs 2500 crore outflows in line with Rs 2100 crore figure in April.