Equity mutual funds witness 50% fall in inflows

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Net inflows into equity mutual fund schemes in June fell by half from the previous month, as many investors chose to book profits when the markets hit record highs. According to data released by the Association of Mutual Funds in India (Amfi), net inflows into these schemes stood at 4,608.75 crore in June, down 50.09% from 9,235.48 crore in May, and 225.25 crore in June 2020.

Redemptions stood at 18,974.82 crore in June against 14,169.63 crore in May and 13,520.03 crore in June last year. “It should be noted that prior to March 2021, the segment witnessed net outflows for eight continuous months. With the net inflows in March, April, May and now in June, clearly, investors are gaining their conviction back on the equity markets,” Himanshu Srivastava, associate director, manager research, Morningstar India said.

According to Srivastava, June’s lower net inflow could also be due to profit-booking amid the market rally.

Domestic institutional investors which include mutual funds, insurance companies and banks invested 7043.51 crore in equity schemes in June, sharply higher than 2067.23 crore in May. Both Sensex and Nifty gained 1% in June, touching record highs. Meanwhile, inflows into monthly systematic investment plans (SIP) increased slightly to 9,155.84 crore in June from 8,818.90 crore in May. “Significant improvement on the coronavirus situation in the country, along with improving recovery rate, and the pick-up in vaccination drive have provided comfort to investors. Good quarterly results and positive earnings growth outlook over the long-term have alleviated concerns of any severe impact of the second wave of the pandemic. Additionally, the surge in markets despite challenges also boosted investor sentiment,” Srivastava added.

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