Photo: iStock
Photo: iStock

Mutual funds gain currency in December as SIPs climb to a record

  • The total amount collected via SIPs in December was a record 8,518.47 crore, against 8,272.87 crore in November
  • According to analysts, rally in largecaps stocks build helped in firm inflow of fund into equity MF schemes in December

After three months of declining inflows, equity mutual funds perked up in December, attracting more than double the investments seen in November.

Net inflows into equity MFs were 4,595.79 crore in December, up 171.83% from 1,690 crore in November, which had marked a three-year low, according to data released on Wednesday by the Association of Mutual Funds in India (Amfi).

Yet, the December inflows were 30.43% lower than a year ago, when they reached 6,606 crore.

GRaphic by Paras Jain/Mint
GRaphic by Paras Jain/Mint

For the calendar year 2019, net inflows into equity schemes hit a three-year low of 78,012 crore, down from the previous year’s 1.27 trillion.

The total amount collected through systematic investment plans (SIPs) in December was a record 8,518.47 crore, against 8,272.87 crore in November. SIPs allow people to invest fixed amounts in mutual fund schemes at fixed intervals.

According to analysts, a rally in large cap stocks helped attract inflows into equity MFs in December. “The sustained rally in large cap stocks has probably helped to build confidence among investors. As sentiments improve, we can expect the flows into equity schemes to gather further momentum," said G. Pradeepkumar, CEO, Union Asset Management Co.

Equity MF redemptions also softened to 15,441.78 crore in December, against the previous month’s 16,216.66 crore and 11,234 crore of December 2018.

N.S. Venkatesh, CEO, Amfi said in a statement: “Retail investors continue to repose trust in mutual funds as reflected by continued flows through SIPs, despite challenging domestic economic scenario and global trade issues and conflicts. Markets have rallied and indices scaled new peaks, which is reflective of resolution coming through structural policies like IBC and lowering of interest rates, as also expectation from budget.’’

According to Naveen Kukreja, CEO and co-founder of Paisabazaar.com, equity funds are expected to see a significant jump in the last quarter of the financial year, with many investors looking to save taxes, while debt schemes should pick up due to increased uncertainty in equity markets across the globe.

In December, domestic institutional investors, who include mutual funds and insurance companies, sold equity shares worth 740.76 crore. During 2019, they were net buyers of shares worth 42,228.55 crore. Meanwhile, foreign institutional investors invested $862.02 million in December and $14.23 billion in the full year.

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