Despite weak markets, these equity mutual funds see strong inflows

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Witnessing positive momentum for the 15th straight month, equity mutual funds attracted a net sum of 18,529 crore in May amid heightened volatility in stock markets and consistent selling by Foreign Portfolio Investors (FPIs).

This was much higher compared to a net inflow of 15,890 crore in April, data from the Association of Mutual Funds in India (AMFI) showed on Thursday.

Equity schemes have been witnessing net inflow since March 2021, highlighting the positive sentiment among investors.

Prior to this, such schemes had consistently witnessed outflows for eight months from July 2020 to February 2021 losing 46,791 crore.

All the equity-oriented categories received net inflows in May with flexi cap funds category being the biggest beneficiary with a net inflow of 2,939 crore.

Besides, large-cap, large & mid-cap fund and sectoral/thematic funds witnessed over 2,200 crore net infusion each.

“Even with markets facing high volatility, uncertainty due to the Ukraine-Russia war, supply chain disruptions, high inflation and lower economic growth projections, investors are opting for equity mutual funds,” Gopal Kavalireddi, Head of Research at FYERS, said.

Inflow through SIP (Systematic Investment Plan) rose to 12,286 crore in May from 11,863 crore in April, indicating that retail investors continue to hold confidence on equity investments. This is the ninth consecutive month of SIP inflow being greater than 10,000 crore, a trend which started in September 2021 with Rs.10,351 crore inflow.

Apart from equity, gold exchange traded funds (ETFs) category saw an inflow of 203 crore.

On the other hand, the debt category saw a net outflow of 32,722 crore in May after witnessing a net inflow of 69,883 crore in the preceding month.

Overall, the mutual fund industry registered a net withdrawal of 7,532 crore last month as compared to a net inflow of 72,846 crore in April.

“Mutual fund negative net flow is an outcome of the rising interest rate cycle, with investors redeeming their investments from money market and low to short-duration funds,” he added.

The overall outflow pulled down the average assets under management (AUM) of the industry to 37.37 lakh crore at the end of May from 38.89 lakh crore at April-end. 

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