Mutual fund investors turn cautious in August, shift to hybrid funds

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MUMBAI: Mutual fund (MF) investors seem to be getting a bit nervous after leading equity indices hit life-highs on a regular basis in the past few weeks. Trying to play it safe, the investors are shifting their investments from pure equity funds to ones that invest in both equity and debt, fund industry executives said, citing official data.
Long-term investors, however, remain firmly on track, resulting in record monthly inflows through the systematic investment plan (SIP) route. In August, the inflows through this route jumped to Rs 9,923 crore — an alltime high level — from Rs 9,608 crore in July. This is the second consecutive month of Rs 9,000-crore-plus net inflows through the SIP route, data from industry trade body AMFI showed.

Overall industry data also showed an upward trend with total assets at the end of last month at Rs 36.6 lakh crore, compared to Rs 35.3 lakh crore at the end of July. During August, net inflow in equity funds was at Rs 8,667 crore, which was much below July’s Rs 22,583 crore figure. In comparison, hybrid funds continued to witness strong inflows with Rs 18,706 crore in August on the back of a Rs 19,481-crore inflow in July, AMFI data showed.
In the hybrid category, boosted by the new fund offer (NFO) for SBI MF’s ‘Balanced Advantage Fund’, the net inflow jumped to Rs 16,571 crore.
The fund management subsidiary of India’s largest bank SBI had garnered over Rs 14,500 crore in that fund, the highest NFO collection by a single scheme in India. After the close of the NFO, SBI MF officials had told TOI that since markets were at an elevated level, a large number of investors had shifted from pure equity schemes and invested in its hybrid scheme.
White Oak Capital CEO Aashish Somaiyaa also indicated a similar investor behaviour. According to him, there is a significant shrinkagein the net flow for equity category and corresponding bump-up in net inflow of the balanced advantage category.
“This leads one to believe that, on aggregate industry level, the large balanced advantage NFO has garnered a lot of traction by way of switches from equity to balanced advantage category. From retail investors’ perspective, in the short term, it may not be a bad development given elevated market levels and generally lower risk perception of balanced advantage funds,” Somaiyaa said.

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