mutualfundsapril2019There are green shoots in the Indian mutual fund industry if not in the economy. Probably a sign of investors expecting things to get better from now than going down the hill further. As per the latest data issued by Association of Mutual Funds of India (AMFI), the mutual fund houses saw net inflows of Rs 1.02 lakh crore in August 2019, about 17% higher than Rs 87,000 crore that came in July 2019.

All the three key categories – debt, equity and hybrid – saw net inflows in August despite markets remaining flat. Equity mutual funds saw net inflows rising by 12% month on month to Rs 9,152 crore, thanks to collections via systematic investment plans (SIP). Debt funds witnessed net inflows of Rs 91,126 crore, up 47.3% from the previous month. Hybrid funds saw net inflows of Rs 4,946 crore, down 33% compared to July as outflows hit dynamic asset allocation/balanced advantage funds.

Back to Rs 25-lakh crore

Mutual funds’ asset base increased to Rs 25.47 lakh crore in August, a rise of about 4% compared to Rs 24.53 lakh crore in July-end, according to AMFI.

In the open-ended MFs, about Rs 11.69 lakh crore is in debt schemes, Rs 6.84 lakh crore in equity schemes, Rs 3.38 lakh crore in hybrid schemes, Rs 16,384 crore in solution-oriented schemes, and Rs 1.53 lakh crore in others including ETFs, index funds, etc. There are 317 open-ended equity schemes and 5.98 crore folios.

In the close-ended MFs, Rs 1.5 lakh crore is in debt schemes, Rs 31,316 crore in equity schemes. Interval schemes have nearly Rs 1,800 crore assets. Fund of Funds schemes (domestic) have about Rs 7,352 crore as on August 2019 end.

Equity funds inflows

There are 317 open-ended equity schemes and 5.98 crore folios, with retail investors featuring prominently. Open-ended equity schemes in August 2019 witnessed a net infusion of Rs 9,152 crore, which is 12% more than Rs 8,112 crore in July 2019. Contra/value funds saw the biggest uptick of 547% month on month, followed by 383% in multicap funds, 56% in smallcap funds, and 35% in largecap funds. Equity Linked Saving Schems (ELSS or tax saving funds) saw net inflows rise by 12%. Large & Mid Cap funds, Focussed funds, Midcap funds, and Sectoral/Thematic funds all reported a month on month decline. (See graphic below)

Equity funds flows in August

Scheme Name Net Inflow (+ve)/
Outflow (-ve)
for the month of July 2019
Net Inflow (+ve)/ Outflow (-ve) for the month of August 2019 % Change
Value Fund/Contra Fund 38.68  250.27 547.02
Multi Cap Fund 326.9  1,581.32 383.73
Small Cap Fund 835.19  1,307.26 56.52
Large Cap Fund 1,914.91  2,582.97 34.89
ELSS 737.48  826.97 12.13
Large & Mid Cap Fund 697.13  562.33 -19.34
Mid Cap Fund 1,393.51  1,067.82 -23.37
Sectoral/Thematic Funds 320.77  214.06 -33.27
Focused Fund 1,872.96  795.03 -57.55
Dividend Yield Fund -25.02  -35.59 na
Sub Total 8,112.52  9,152.43 12.82

Although equity funds inflows stepped up, the SIP collections, almost 90% of which are into equity schemes, fell to Rs 8,230.76 crore in August compared to Rs 8324.28 crore in July. This may be because the investors might have been jittery about the continuing decline in SIP returns. Investors’ assets in SIP stands at Rs 2.71 lakh crore across 2.81 crore accounts.

N S Venkatesh, Chief Executive, AMFI said: “Retail investor interest in equity mutual funds, for the fourth time in succession, continues to be steady, displaying maturity, despite uncertain economic and volatile market situation. Net inflows, largely in all categories of equity funds, especially in small and mid-cap funds, as also in ELSS segment, signifies heightened confidence and interest in emerging businesses and disciplined tax planning.”

There was a small outflow of Rs 62 crore in close-ended equity plans, taking total equity inflows to Rs 9,090 crore last month. There are 122 close-ended equity schemes and 17.6 lakh folios.

Debt funds back in action

There are 314 open-ended debt schemes and 55.35 lakh folios. A lion’s share of debt fund assets is held by institutions. Open-ended debt schemes in August 2019 witnessed a net infusion of Rs 91,126 crore, which is 47% more than Rs 61,845 crore in July 2019.

Ultra Short Duration funds saw the biggest uptick of 370% month on month, followed by about 75% in liquid funds, nearly 70% in short duration funds, and 39% in corporate bond funds. Five debt fund categories viz. money market funds, gilt funds with 10-year constant duration, Banking and PSU funds, Long duration funds and Floater funds, all reported a month on month decline. (See graphic below)

Debt funds flows in August

Scheme Name Net Inflow (+ve)/
Outflow (-ve)
for the month of July 2019
Net Inflow (+ve)/ Outflow (-ve) for the month of August 2019 % Change
Ultra Short Duration Fund 600.95 2,829.25 370.80
Liquid Fund 45,441.23 79,428.20 74.79
Short Duration Fund 586.17 994.28 69.62
Corporate Bond Fund 2,573.14 3,578.27 39.06
Money Market Fund 5,062.86 3,764.88 -25.64
Gilt Fund with 10 year constant duration 80 40.17 -49.79
Banking and PSU Fund 5,913.98 2,769.22 -53.18
Long Duration Fund 58.74 10.59 -81.97
Floater Fund 381.3 39.71 -89.59
Low Duration Fund -223.48 794.12 na
Medium Duration Fund -936.54 -561.08 na
Medium to Long Duration Fund -60.25 -28.27 na
Dynamic Bond Fund -122.36 -67.27 na
Credit Risk Fund -3,411.35 -2,269.64 na
Gilt Fund -119.68 307.28 na
Sub Total 61,845.54 91,126.76 47.35

“Overnight funds continues to gain traction with an average AUM increase from Rs 11,500 crore in April to Rs 20,700 crore in August. On the broader debt side we see the continued flow towards the short end of the curve in categories like Corporate Bond and Banking & PSU Debt,” says Vishal Kapoor, CEO, IDFC AMC.

There was a net outflow of Rs 1,495 crore in close-ended debt plans, as fixed term plans, capital protection oriented schemes and other close ended debt schemes matured. This takes the total debt inflows to Rs 89,631.53 crore in August.

Hybrid funds take a dip

There are 128 open-ended hybrid funds and investors in those schemes have 96.59 lakh folios. Open-ended hybrid funds in August 2019 saw net inflows of Rs 4,947 crore, down 33% compared to Rs 7,393 crore in July 2019.

Multi asset allocation funds saw a 2% rise month on month in net inflow. Arbitrage funds saw a marginal drop. Net inflow to dynamic asset allocation/balanced advantage funds tanked by 35%. Both balanced hybrid/aggressive hybrid funds and equity savings funds saw net outflows in August 2019. (See graphic below).

Hybrid funds flows

Scheme Name Net Inflow (+ve)/
Outflow (-ve)
for the month of July 2019
Net Inflow (+ve)/ Outflow (-ve) for the month of August 2019 % Change
Multi Asset Allocation  90.99 92.85 2.04
Arbitrage Fund  5,809.81 5,702.93 -1.84
Dynamic Asset Allocation/Balanced Advantage  1,323.88 856.51 -35.30
Balanced Hybrid Fund/Aggressive Hybrid Fund  673.75 -879.21 na
Equity Savings  -220.91 -607.38 na
Sub Total  7,393.21 4,946.57 -33.09
Author
Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. He can be contacted on kumarsroy@rupeeiq.com