Mumbai: Net inflows into domestic mutual funds slowed down to a five-month low in August because of uncertainty in the markets. Data from the Association of Mutual Funds of India (AMFI) showed that net equity inflows saw a steady decline, slipping 11.39% to 8,375 crore in August. Equity mutual fund schemes saw an infusion of 9,452 crore in July.

However, redemption pressures from mutual funds’ equity schemes also increased in August, jumping 35% as investors opted for profit booking with the markets scaling record highs.

During the same period, inflows from systematic investment plans (SIPs) continued to stay robust. The total amount collected through SIPs in August was 7,658 crore, as against 7,554 crore in July, according to AMFI data. The total number of SIP accounts at the end of August stood at 23.9 million, against about 23.3 million on 31 July. SIPs allow people to invest a fixed amount in a mutual fund scheme periodically at fixed intervals.

Equity inflows are muted, while robust SIP numbers are reassuring, said D.P. Singh, executive director and chief marketing officer at SBI Mutual Fund. “The equity inflow may have fallen because of market volatility in the month. I do not see these inflows continuing to be lower and expect them to increase by closure of the fiscal," he said.

Others agreed. “Money flowing through the SIP route is holding up. Redemptions are higher this month mostly because of the equity markets hitting record high and investors looking for profit booking. However, the trend is not concerning as inflow through SIPs is likely to stay intact," said Kaustubh Belapurkar, director of fund research at Morningstar Investment Adviser India Pvt. Ltd. It is comforting that new inflows weren’t impacted much in the month, he said.

Redemptions in equity MF will take a pause once the markets start declining as ‘profit-booking’ by investors will be put on hold then, said Atul Bhole, vice president and fund manager, DSP Investment Managers.

Uncertainty in markets because of macros, politics, a weak rupee and high crude prices were also responsible for lower inflows into equity mutual fund schemes in August, he said. “Steep valuations concerns could also be another reason," he said.

So far this year, Sensex and Nifty have gained 10-12%, while Brent crude has climbed 14.45% and the rupee has weakened 11.27%. On Thursday, the rupee slipped to historical low of 72.11 a dollar amid concerns that US President Donald Trump could slap additional tariffs on Chinese goods. So far this year, foreign institutional investors have sold Indian equities worth $305.1 million while domestic institutional investors have bought local shares worth 69,878.54 crore.

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