Total amount collected from SIPs in the month was ₹8,263 cr against ₹8,231 cr in Aug
Credit risk funds, which are a higher risk debt category, saw an outflow of ₹2,351 crore
Despite a bumper stock market rally, net inflows into domestic equity mutual funds (MFs) were at a four-month low in September. According to the Association of Mutual Funds of India (Amfi) on Wednesday, net inflows into equity mutual fund schemes were at ₹6,728.02 crore in September, down from ₹9,214.81 crore in August. In September last year, equity mutual fund schemes saw an inflow of ₹11,172 crore.
“Going forward, if the equity markets start showing growth, we should see positive upward trend in mutual funds too. We have seen positive growth in the mutual fund market from retail investors. The regulator has done a phenomenal job in mitigating the risks in debt market investments. For equity funds, we see the growth is mirroring the markets. The new SIP account openings are showing robust growth. SIP is here to stay and when the broader markets show performance, we will see SIP outperforming," said N.S. Venkatesh, chief executive, Amfi.
During the month, inflows from systematic investment plans (SIPs) saw a marginal increase. The total amount collected through SIPs in September was ₹8,262.94 crore, up from ₹8,230.76 crore in August. SIPs allow people to invest a fixed amount in a mutual fund scheme periodically at fixed intervals.
In September, domestic institutional investors bought shares worth around ₹12,000 crore. After aggressive selling in the previous months, foreign institutional investors bought Indian shares worth $1.04 billion in September, the highest monthly inflow since May.
The benchmark index Sensex rose more than 3% in September after the government cut corporate taxes, prompting foreign brokerages to upgrade Indian markets in anticipation of an increase in corporate earnings.
Meanwhile, open-ended debt funds saw a net outflow of ₹1.58 trillion driven predominantly by outflows from liquid funds. Liquid fund flows are highly volatile due to factors like advance tax payments. Excluding liquid funds there was a shift among investors towards less risky debt categories like corporate bond funds and banking and PSU debt funds. Corporate bond funds have to invest at least 80% of their corpus in debt rated AA+ and above. Banking and PSU debt funds, as the name suggests, have to invest at least 80% of their corpus in banking and public sector debt. The latter two categories saw net inflows of ₹565 crore and ₹2,065 crore, respectively. On the other hand, credit risk funds, which are a higher risk debt category, saw an outflow of ₹2,351 crore.
Hybrid funds, excluding arbitrage funds, saw net outflows of ₹2,730 crore, continuing a trend of poor flows into these categories since April.
Arbitrage funds use futures and options to hedge their equity exposure and deliver debt-like return with equity taxation. They are not truly ‘hybrid’ funds because they do not invest in a mix of equity and debt.
“Some of the apprehensions about debt are also rubbing off on hybrid funds. Some hybrid schemes were found holding defaulted debt and they took a hit on their net asset values (NAVs)," said Vijai Mantri, chief investment strategist and co-promoter, JRL Money.
“The unravelling of the earlier mis-selling of these funds on the promise of regular income from dividends continues to hit flows," said Kalpesh Ashar, founder, Full Circle Financial Planners and Advisors.