The mutual fund industry continued to receive healthy inflows in equities even as markets remained choppy. The BSE Sensex fell marginally by 0.20% in November. However, the correction does not seem to have deterred investors.
The latest AMFI data shows that equity funds (including ELSS and Equity ETFs) received record net inflows of Rs 32,755 crore in November 2017.
The large inflows in Equity ETFs (Rs 12,447 crore) was primarily due to the launch of government’s Bharat 22 ETF which mopped up Rs 14,499 crore. Other equity new fund offers (NFOs) collected Rs 3,160 crore.
Net inflow/outflow in November 2017
If we include balanced funds in equity category, the net inflows ballooned to Rs 40,369 crore. Balanced funds are gaining immense popularity after the changes in tax structure of debt funds in 2014. From merely Rs 13,370 crore in April 2014, balanced funds AUM has reached Rs 1.55 lakh crore in November 2017, an increase of 1060%. Balanced funds invest a minimum of 65% in equity to enjoy the equity tax status. As a result, the year to date (YTD) inflows in equity funds (including ELSS, balanced funds and Equity ETFs) stood at Rs 1.98 lakh crore.
Industry estimates suggest that arbitrage funds received Rs 2,000 - Rs2,500 crore while the bulk of the inflows have flowed in pure equity funds. “Investors are bullish on the market. Post demonetization, we are witnessing a shift from physical to financial assets. Investors don’t have too many choices as no other asset class is performing as good as equity. We believe the inflows will sustain as the bulk of the money is coming through SIPs. In fact, investors have become savvier. They are topping up their SIPs at every correction,” says Himanshu Vyapak, Deputy CEO, Reliance Nippon Life AMC.
Of Rs 19,508 crore net inflows in pure equity funds, close to Rs 6,000 crore comes in through SIPs every month. The monthly SIP inflows which averaged Rs 3,000 crore last fiscal has doubled to almost Rs 6,000 crore this year. The industry has collected Rs 34,887 crore during April-October 2017 through SIPs, taking the total SIP folios to 1.73 crore. Individual investors, who mainly invest through SIPs, accounted for 45.4% of overall assets in Oct 2016; this now stands at 48.5% in Sep 2017.
The rising inflows helped industry’s equity assets under management (AUM) touch a new high. The AUM of pure equity funds, which includes arbitrage funds, touched Rs 6.56 lakh crore in November.
Besides equity, liquid and income funds collectively mopped up Rs 86,782 crore in November which helped industry’s asset base touch a new high of Rs 22.76 lakh crore.
Since demonetization, flows into mutual funds have been very strong, especially in equity and balanced funds. From November 2016 to October 2017, equity funds have received inflows of Rs 1.35 lakh crore and balanced funds have received Rs 74,000 crore.
