Home >Mutual Funds >News >Net inflows into equity mutual funds decline 12% in May

Amid falling markets and widening economic gloom, equity mutual fund inflows slowed in May, even as the panic exodus from credit risk funds cooled.

Net inflows into equity schemes fell 11.6% in May to 5,666.34 crore from April, data from the Association of Mutual Funds in India (Amfi) showed. This compares with an inflow of 5,847.07 crore in May last year. In May, stock markets had fallen 3.84% after rallying 14.42% in April.

N.S. Venkatesh, chief executive, Amfi, said inflows into equity schemes fell probably due to the economic slowdown and market volatility. Redemptions from equity schemes eased to 7,283.23 crore in May from 8,104.46 crore in April, and 14,237.25 crore in May 2019.

Inflows through systematic investment plans (SIP), in which retail investors make regular contributions, saw a marginal dip to 8,123,03 crore in May from 8,376.11 crore in April.

“Inflows into equity funds, while lower than previous months, continue to remain positive, largely driven by SIP inflows. Investors continue to prefer large- and multi-cap funds given the market volatility and uncertain economic environment due to the covid-19 pandemic," Kaustubh Belapurkar, director of manager research, Morningstar India said.

Outflow from credit risk funds decreased to 5,173.04 crore in May from 19,507.05 crore in April. Redemptions in credit risk funds were at 5,264.76 crore in May, down from a massive 19,238.98 crore in April. Overall, debt funds saw an inflow of 63,665.54 crore in May, Amfi data showed. After an outflow of 1.94 trillion in March, debt funds had received overall inflows of 43,431.55 crore in April.

“On the debt side, investors, taking advantage of conducive reducing interest rates trend and the shift towards high quality AAA-rated securities has resulted in steady rise in the net flows. Credit risk concerns have ebbed following regulatory support, redemptions have come down and we would see investors allocating higher quantum of savings to high quality debt paper," Venkatesh said.

However, the overall debt inflow data of 63,665.54 crore does not match with the figure Amfi had disclosed on 1 June—“Thanks to the measures taken by Sebi, RBI and finance ministry, normalcy has returned in debt markets and mutual funds. Net flows in debt mutual fund schemes as on May 2020 have risen to 94,224.29 crore, more than double compared to 43,431.55 crores as on April 2020," Amfi had tweeted.

Commenting on the mismatch, Venkatesh told Mint, “Mutual fund registrar and transfer agents (RTAs) are working on the uniformity in calculating the debt portion of asset under management (AUMs) in a few categories of schemes like hybrid and solution-oriented funds, and we hope to have appropriate reflection of net flows from debt schemes, going forward."

Meanwhile, gold exchange-traded funds (ETFs) saw an inflow of 815 crore in May, against 730 crore in April. In the whole of 2018-19, gold ETFs had received just 1,600 crore inflows by comparison. At 10,806 crore, arbitrage funds also saw a huge jump from 6,587 crore they got in April.

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