Inflows into equity mutual funds drop 30% in September

The contribution from systematic investment plan (SIP) stood at an all-time high of Rs 16,042.06 crore in September. The mutual fund industry also crossed the four crore unique investor mark in the month.

The profit booking in September was due to the surge in the domestic equity markets. The BSE’s 30-share Sensex and NSE’s Nifty 50 had touched new life time highs in the month.

Small cap funds saw a 37 per cent drop in inflows to Rs 2,678.47 crore in September compared to Rs 4,264.82 crore. Inflows into mid-cap funds dipped to Rs 2,000.88 crore compared to Rs 2,512.34 crore in the previous month.

Large cap funds witnessed outflows of Rs 110.6 crore in September compared to outflows of Rs 348.98 crore in August.

“Large cap showed a negative number (outflows) of Rs 110 crore (in September) as some profit booking would have happened in the large cap funds,” said N S Venkatesh, CEO, AMFI.

Sectoral or thematic fund inflows declined to Rs 3,146.85 crore compared to Rs 4,805.81 crore in August, the AMFI data showed.

Debt mutual fund outflows increased to Rs 1.01 lakh crore in September compared to outflows of Rs 25,872.5 crore in the previous month.

“It (debt mutual fund outflows) is on expected lines. September is the quarter end as well as the half year end, and corporates would have withdrawn the money from the liquid and overnight funds to pay their half yearly taxes. The banks would also have withdrawn the money or otherwise they would have to maintain additional capital on these funds,” Venkatesh said.

Banks would rather withdraw this money and park it with the Reserve Bank of India (RBI) where they don’t need to maintain capital, he said.

Liquid funds saw large outflows to the tune of Rs 74,176.55 crore, followed by money market funds (Rs 9,157.94 crore), floater funds (Rs 4,903.25 crore) and corporate bond funds (Rs 2,459.5 crore).

Net inflows into hybrid schemes were Rs 18,650.45 crore in September compared to Rs 17,081.68 crore in the previous month. Inflows into multi asset allocation funds rose to Rs 6,324.19 crore from Rs 1,617.33 crore in August.

Inflows into gold exchange-traded funds (ETF) dipped to Rs 175.29 crore in September from net inflows of Rs 1,028.6 crore in August and Rs 456.15 crore in July.

According to Venkatesh, the drop in inflows into gold ETF is due to the appreciation of the dollar against major currencies.

“When the dollar strengthens, there will be lesser inflows into the gold ETF,” he said, Venkatesh, however, said that inflows will continue into gold ETF on safe haven appeal amid Israel-Palestine conflict.

Mutual fund industry’s net asset under management (AUM) was Rs 46.57 lakh crore, while the average AUM was Rs 47.79 lakh crore in September.

Retail mutual fund folios (equity + hybrid + solution oriented schemes) also were at an all-time high of 12,54,51,947 in September compared to 12,30,07,367 in August.

The SIP contribution crossed the Rs 16,000 mark for the first time. In August, SIP contribution stood at Rs 15,813 crore.

The number of SIP accounts stood at the highest ever at 7,12,93,738 in September compared to 6,96,85,946 in August. The SIP AUM stood at Rs 8,70,363.38 crore compared to Rs 8,47,130.87 crore in the previous month.

The number of new SIPs registered in September were 36,77,157 which is an all-time high. During the month, the number of SIPs matured were 20,69,365.

Commenting on the monthly data, Union Asset Management company’s CEO G Pradeepkumar said, “The SIP flows continue to be good and could act as a powerful counterforce against any serious FPI outflows.” However, given the rich valuations in mid and small cap stocks, investors are advised to take a staggered approach to investments, he said.