Mutual funds’ AUMs hit record Rs20.6 trillion in August as inflows into equity funds rise
Mumbai: Mutual funds’ assets under management (AUMs) hit a record Rs20.6 trillion in August, as falling fixed deposit rates prompted investors to move money to equity funds.
According to data from the Association of Mutual Funds in India (Amfi) released on Wednesday, total AUM rose 2.3% in August. This was backed by a 60% jump in net inflows in equity schemes to Rs20,362 crore –the highest ever, from the month before.
“New investors are also coming in. They are coming in primarily through SIP (systematic investment plans) as well as staggered investment route,” said Gopal Agrawal, chief investment officer (equities) at Tata Asset Management Co Ltd.
Mutual fund SIPs allow investors to regularly invest small amounts that go into equities instead of making lump sum investments at various points of time. Such investments are mostly made on a monthly or quarterly basis, although it is possible to make them even every week.
“Lower interest rates are distracting them from bank deposits,” he added.
On 2 August, Sensex touched a record 32,686.48 points, and has corrected 3.13% ever since.
“The trend of financialisation of savings is clearly reflecting in these figures, lower rates and waning lucrativeness of other investment options, are leading to more flows into the equity funds,” said Navneet Munot, chief investment officer, SBI Funds Management Pvt. Ltd,
“The penetration is also reflecting the hard work put up by the industry in creating investor awareness over the last few years,’ added Munot.
There were also decent inflows into balanced schemes as the net inflows in these schemes rose by 11.7% to Rs8,783 crore –again a record high.
“Balanced schemes are attracting more inflows are a mix of debt and equity. It is a moderately risky product,” said Agrawal of Tata.
“People with relatively lower risk appetite are opting for these schemes. First time investors, who were earlier predominantly fixed deposit investors are choosing balanced funds,” Agrawal added.
Fund managers think that the SIP route was the best option for investors currently when valuations look stretched.
“I would think SIP route is the best option looking at the valuations and the market run up,” added Agrawal.