Equity funds witnessed a decline in inflows at Rs 3,437 crore during April 2021 as against inflows of Rs 9,115 crore in March amid volatility in stock markets.
However, debt funds, led by liquid schemes, received inflows of Rs 1,00,903 crore last month against outflows of Rs 52,528 crore in March, according to data released by the Association of Mutual Funds in India (AMFI).
Liquid funds garnered Rs 41,507 crore. Equity schemes had seen outflows of Rs 4,534 crore in February and Rs 9,253 crore in January. AMFI said arbitrage funds saw inflows of Rs 7,245 crore in April against Rs 3,087 crore in March. However, fixed term plans posted outflows of Rs 22,402 crore in April while index funds and ETFs got Rs 5,079 crore inflows.
AMFI CEO N S Venkatesh said, “The start to fiscal 2021-22 has been quite positive with mutual fund industry average AUMs seeing all time high at Rs 32.42 lakh crore owing to overall positive flows in all open-ended categories — be it debt, equity, hybrid, solutions-oriented, ETFs, index and fund of funds and continued robust SIP contribution during April 2021 at Rs 8,591 crore.”
“The flows in April were driven by liquid, overnight and money market schemes on the fixed income side, thematic/ sectoral schemes and arbitrage and dynamic asset allocation schemes in the equity and hybrid segment. We expect these flows to continue in the current fiscal,” he added.
According to Nirav Karkera, head of research, Fisdom, equity mutual funds ended a second consecutive month with net positive flow. Within equity mutual funds, the shift in preference from broad themes like multicap to nuanced ones like thematic or sectoral funds and international fund of funds (FoFs) are visible.
“The data reflects a developing appetite among investors for stocks beyond large caps, especially ones in the midcap segment. The relatively heavy inflow in arbitrage funds can be attributed to the healthy arbitrage opportunities and spreads capital markets have been offering lately,” he said.
Passive funds continue to garner investor interest in a rather strong way. “On the debt front, the new financial year has reeled treasury interests back in as categories like liquid, overnight and money market funds record bulky inflows. Overall, the buying pattern is indicative of the crossroads Indian investors are at … waiting for a promising economic signal and prepared to participate wholeheartedly,” Karkera added.
FundsIndia head of research Arun Kumar said, “We saw early signs of domestic investors getting back into equity mutual funds in March-21 led by strong equity mutual fund inflows after 8 consecutive months of outflows. The trend of positive inflows has continued for April but the quantum has been lower.” “Overall while the inflow trend remains positive, the recent spike in covid cases is a concern and we need to monitor the impact on investor sentiment and behaviour in the near term,” said another analyst.