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Net inflows into equity mutual funds fell 20% in September despite record contributions from monthly systematic investment plans (SIPs), industry data released on Friday showed.

According to Association of Mutual Funds in India (Amfi) data, equity schemes received net inflows of 6,456.38 crore in September, down from 8,056.80 crore in August. In comparison, September 2020 had seen net outflows of 1,009.01 crore.

The total inflow through SIPs was 10,351.33 crore in September, against 9,923.15 crore in August. The decline in net inflows despite high SIP contribution indicates large redemptions by lump sum investors. Net redemptions in equity schemes were 25,879.88 crore in September, compared to 23,144.89 crore in the previous month.

“Equity-oriented new fund offers (NFOs) continue to attract investors, thus garnering robust flows. During the month, five equity-oriented NFOs were launched, which collected around 6,579 crore, thus significantly contributing towards net inflows," said Himanshu Srivastava, associate director, manager research, Morningstar India.

Srivastava said many investors may have booked profit in September as markets hit record highs. “Also, it is seen some investors possibly take money off the table during the festive season for personal spends. Besides, as there is very selective travel restrictions, people may be using that money for ‘revenge tourism’, a phenomenon seen typically post-covid," he said.

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During the month, a record 2.68 million SIP accounts were added, totalling 44.90 million SIP accounts.

Amfi chief executive N.S. Venkatesh termed the record SIP figure a “milestone" and the record MF assets under management (AUMs) at 36.73 trillion as “historic".

“Retail investors are preferring mutual funds over low-yielding traditional savings avenues. On the back of rapidly improving economic scenario aided by conducive RBI policy and easing of covid-related curbs, the equities asset class would continue to deliver superior risk adjusted returns," he said.

According to D.P. Singh, chief business officer, SBI Mutual Fund, the industry continues to receive strong inflows from tier-II and -III cities, which is getting reflected in the industry SIP book. “As a fund house, we continue to advise investors to stagger investments over a period and stay committed," he said.

With all segments of the market–large, mid and small-caps–doing well, the multi-cap category was, expectedly, the biggest beneficiary during the month, followed by focused and flexi-cap categories.

Balanced advantage funds, which invest a part of their corpus in equity, also saw significant inflows of 5,233 crore.

Debt mutual funds saw net outflows of 63,910 crore, largely due to seasonal factors such as advance tax payments. Outflows were concentrated in categories such as liquid funds, ultra short duration funds, low duration funds and money market funds. Aashwin Dugal, co-chief business officer, Nippon India Mutual Fund, said this was partly due to a section of institutional investors who exit at the end of every quarter. “The other reason was more to do with a few institutional investors who redeemed from short to medium debt funds in anticipation of announcements by the RBI," Dugal added.

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