Volatility in stock markets seems to be playing on the minds of mutual fund (MF) investors.
According to the monthly data released by the Association of Mutual Funds in India (AMFI), equity funds saw 31 percent less inflows in August 2022, compared to the previous month.
Hybrid funds also saw increased net outflows in August. Total assets under management (AUM) for the MF fund industry stood at Rs 39.33 lakh crore, as on August 31, 2022, compared to Rs 37.74 lakh crore, as on July 31, 2022.
Among equity funds, flexi-cap funds saw net inflows of Rs 2,099 crore in August, followed by mid-cap and small-cap funds, with net inflows of Rs 1,479 crore and 1,259 crore, respectively. Sector or thematic funds saw net outflows of Rs 1,266 crore.
Equity-linked saving schemes (ELSS) and dividend yield schemes saw net outflows in August. In July 2022, all equity fund categories received inflows.
Inflows into the equity schemes were down 42 percent in July, compared to June.
Outflows from three equity fund categories indicate relatively less bullish sentiment among equity MF investors, compared to the previous month in which all equity fund categories received inflows.
SIPs still favourite
Investors are still showing keen interest in systematic investment plans (SIPs) which are popular among small individual investors. Contributions to SIPs have gone up to Rs 12,693 crore in August, compared to Rs 12,139 crore in July. SIP accounts went up to 5.71 crore in August, compared to 5.61 crore in July.
Hybrid funds which invest in a mix of bonds, stocks and gold have seen outflows in August 2022 to the extent of Rs 6,601 crore, compared to Rs 5,146 crore in the previous month.
Barring arbitrage funds, all hybrid fund categories saw net inflows in August. Arbitrage funds saw net outflows of Rs 8,548 crore, compared to the outflows of Rs 6,407 crore in July. Market volatility has led to shrinking price difference between spot and futures market. This has made returns on arbitrage funds unattractive, compared to other short-term debt funds.
Debt funds bounce back
Debt funds came back with a bang. Fixed-income schemes, as a whole, saw net inflows of Rs 49,164 crore in August 2022, compared to Rs 4,930 crore in July 2022. Liquid funds saw net inflows of Rs 50,095 crore. Overnight funds saw net outflows of Rs 16,405 crore in August. “Investors are redeeming their investments in interest- rate sensitive debt funds and parking their money into liquid funds,” says NS Venkatesh, Chief Executive, AMFI.
Ultra short-duration funds saw net inflows of Rs 6,372 crore. Banking and PSU debt funds and floater funds saw net outflows of Rs 1,380 crore and Rs 2,285 crore, respectively, in August.
Gold ETFs saw net outflows of Rs 38.14 crore in August, compared to net outflows of Rs 456 crore in the previous month. Despite a fall in gold prices in international markets over the last few months, Indian investors are not selling gold aggressively, thanks to the falling rupee against the greenback. Gold acts as a portfolio protection when the rupee is weak against the dollar. The MF industry launched 37 new fund offers in August and mobilised Rs 7,985 crore in August.