Mumbai: Net inflows into domestic mutual funds slowed down for the second month in a row in June, with market volatility discouraging new investors. Net equity inflows slowed by 18.8% to ₹ 10,623.30 crore in June following negativity over rising oil prices and global trade war fears, data from Association of Mutual Funds of India (AMFI) showed.
However, inflows from systematic investment plans (SIPs) continued to move at a decent pace, said fund managers. “While SIPs are continuing, fresh money is not coming as much as previous months, and redemptions are increasing over previous months resulting in month-on-month decline in equity flows. However, it is still year-on-year positive growth," said Nilesh Shah, managing director of Kotak Mahindra Asset Management Co. Ltd.
Mutual fund SIPs allow investors to invest small amounts regularly instead of making lump sum investments. Such investments can be made every week, month, or every quarter. “SIP flows will continue. We don’t see any issue there. EPFO inflows will also come in. Redemption pressure may continue and will be dependent on market movement," added Shah.
The Benchmark 30-share Sensex edged up 0.29% in choppy trade in June with the market lacking direction. The looming dangers of a trade war, coupled with concerns over fiscal deficit due to rising crude oil prices, kept investors wary.
A strengthening dollar and a depreciating rupee only added to the foreign investors’ woes. “While it is early to comment on long-term trend changes based on a single month, there appears to be a fall in lump sum flows because of market volatility. SIP flows appear to be stable," said Radhika Gupta, CEO, Edelweiss Asset Management Ltd.
“We do continue to see investor flows into quality funds, especially via the SIP route, because equity continues to be an attractive asset class compared to other alternatives. The long-term trend remains healthy," Gupta added.