Investors seem to be pressing the ‘sell’ button more these days. Net inflows in equity mutual funds have declined for the fourth consecutive month in August, data from industry body Association of Mutual Funds of India shows. While investors continue to invest through the SIP mode in funds, many are probably wanting to book profits after markets jumped by 40% in the last four years.
The record lows hit by rupee, the sky-high oil prices and successive rate hikes effected by the RBI have hit the macro picture. The ‘micro’ situation is improving with companies showing green shoots of earnings recovery, but investors seem to be thinking otherwise.
|Time Period||Equity MF sales (Rs Cr)||Equity MF redemptions (Rs Cr)||Net inflow (Rs Cr)||MoM gain/drop (%)|
|Source: AMFI Sep 2017 to Mar 2018 equity MFs include arbitrage schemes|
Equity funds in August witnessed nearly Rs 15,000 crore redemption as against sales of Rs 22,682 crore, resulting in a net inflow of Rs 7,734 crore. This is the lowest net inflow in six months. Monthly net inflows dropped to Rs 2,954 crore in March 2018, as investors sold off positions to take advantage of Long Term Capital Gain (LTCG) tax.
The important thing about August 2018 data is that redemptions in equity MFs have jumped big time. In July 2018, redemptions totalled less than Rs 11,000 crore. But that figure has jumped to nearly Rs 15,000 crore in a month, springing a roughly 50% jump.
On the bright side, the total no. of SIP Accounts as on August 31, 2018, stood at 2.39 crore as against about 2.33 crore as on July 31, 2018. SIP AUM was Rs 2,32,167 crore (about 9.2% of the overall MF industry AUM of Rs 25 lakh crore). The total amount collected through SIPs during the month of August 2018 was Rs 7,658 crore, as against Rs 7,554 crore in July 2018.
A large part of the SIP money coming into the industry is from retail investors. Retail folios currently stand at 6.41 crore out of the 7.65 crore total folios. According to AMFI, retail AUM is now over Rs 10.46 lakh crore (across equity, debt, hybrid etc.)
N S Venkatesh, chief executive, AMFI said: “We are witnessing a very mature and evolved behaviour from the retail mutual fund investors, as despite the continued market volatility, the equity inflows into markets continue to be robust. Aided by SIPs, retail inflows have been positive for 29 consecutive months and the overall number of folios now rising for 51 months in a row. This has translated into mutual fund industry AUM crossing Rs 25 lakh crore, a significant milestone for the industry.”