Net inflows into equity mutual fund surge to 4-month high in November

Despite sharp correction in markets due to uncertainty led by Omicron variant of covid, net inflows into equity schemes stayed robust in November while monthly systematic investment plan (SIP) surged to record high. Equity mutual fund schemes received a net flow of ₹10,686.77 crore in November, a four-month high, according to data released by Association of Mutual Funds in India (Amfi) on Thursday.

This shows net inflows into such schemes nearly doubled from ₹5,079.16 crore in October. Monthly SIP contributions were at new high at ₹11,004.94 crore in November from ₹10,518.53 crore in previous month.

According to Himanshu Srivastava, associate director-manager research, Morningstar India correction in the equity markets in the month of November provided investors a good investment opportunity. Most of the investors found the correction in the market as good entry point and many preferred to stay invested which is evident from the low redemption numbers, he said.

 “Despite the concerns over the Omicron variant of the coronavirus pandemic, the growth outlook over the long-term remains strong. Also, the perception that despite intermittent corrections the markets would continue to surge would have prompted many investors to make the most of the recent dip in the markets,” he said.

Markets had succumbed to sharp sell-off towards the end of November with the benchmark indices Sensex and Nifty losing nearly 4% in the month. By the end of November, Nifty had lost 8% from record highs hit in October. Most of the markets anxiety was due to global factors such as Fed’s taper announcement, rising bond yields, higher crude oil prices, and strengthening of the US dollar Index. However, domestic institutional investors (DIIs) which include mutual funds, insurance companies, banks and pension funds had pumped in ₹30522.02 crore in November highest in 2021.

 “The markets had seen a sharp fall for a few days around the end of the month, but it has recovered swiftly. The inflows into equity schemes were equal to the SIP book last month, signifying that investor are staying committed to disciplined mode of investing and not taking hasty decisions with short-term market corrections. Further, markets are forward looking and with the past experience of market correction and sharp bounce back, investors now understand that they should look at the long-term economic growth story,” said DP Singh, chief business officer, SBI Mutual Fund.

According to Amfi, net inflows into all the five categories of open-ended schemes, income/debt oriented schemes, growth/equity oriented schemes, hybrid schemes, solution oriented schemes, and other open-ended schemes including Index schemes, ETFs, fund of funds schemes have reported positive flows during November.

 Even within the closed-ended category, for the first time this fiscal, the income/debt oriented schemes led by fixed maturity plans.

NS Venkatesh, Chief Executive, AMFI said: “Despite rising uncertainty owing to feared third wave of the pandemic, and extreme equity market volatility, retail investors continue to benefit and hence also stick to displaying trust on the disciplined SIP mode of savings in Mutual Funds. On the back of accommodative RBI policy stance, with focus on economic revival and growth and keeping inflation within target, we expect MF Industry to continue to report robust growth, and deliver value to its investors beyond 2021, in the years to come.”