Equity MFs see all-time high net inflow of ₹28,463 cr. in March

Equity mutual funds attracted an all-time high net inflow of ₹28,463 crore in March, on continued interest by retail and HNI investors, who used market correction as a good buying opportunity.

The net infusion, which also marks the 13th straight month of net inflow, indicates the underlying bullishness among investors despite record outflow by foreign funds.

This was significantly higher than the net inflow of ₹19,705 crore in February, ₹14,888 crore in January and ₹25,077 crore in December 2021, data from the Association of Mutual Funds in India (AMFI) showed on Friday.

With this, during FY 2021-22, the equity-oriented categories received a robust net inflow of ₹1,64,399 crore, compared with the net outflow of ₹25,966 crore during the FY 2020-21.

Akhil Chaturvedi, Chief Business Officer, Motilal Oswal AMC attributed the latest monthly inflow to the continued interest by retail and HNI investors to make use of market opportunities and enter in corrections for better valuations.

“On-going Russia-Ukraine crisis has kept the market volatile, giving advantage to investors in making higher allocations or re-balance their existing allocations. All said, risk-appetite for equities is certainly on rise which is very healthy for markets and investors for long-term wealth creation,” he added.

Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, said that geopolitical tension due to the raging war between Russia and Ukraine and concerns over the surging crude prices triggered a sharp correction in the market towards the end of February and early March. This provided investors a good entry point into equities.

Going ahead, Amfi CEO N S Venkatesh said SEBI’s ban on launch of new fund offer (NFO) will not affect inflows in equity schemes.

“We don’t see any tapering, because the economy is doing well, the market is doing well. We don’t anticipate any tapering,” he added.

Equity oriented categories have been witnessing consistent net inflows since March 2021, after the second wave of COVID hit India and resulted in the correction in the markets. This highlighted 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.

Within the equity segment, all categories saw net inflows during the period under review with Multi-cap category being the biggest beneficiary with a net inflow of ₹9,695 crore. Besides, large & mid-cap fund and large-cap fund witnessed over ₹3,000 crore net infusion each.

The Multicap category also saw a launch of a new fund — SBI Multi Cap Fund — which mobilised ₹8,170 crore. Besides, the funds from this segment invests at least 25% each in large, mid and small cap stocks, and hence helps investors to participate in the growth in all the three market segments, Morningstar India’s Srivastava said.

A falling market and turmoil across the globe have not prevented Indian investors from investing in the market through the mutual fund route. Their trust in the market can be seen from staggering net inflow in March 2022,” TradeSmart Chairman Vijay Singhania said.

Amfi’s Venkatesh, said “The deteriorating geo-political situation with Russia-Ukraine war, elevated hawkish U.S. Fed stance, or even the rising inflation owing to spurt in fuel prices has not deterred continued investor confidence in the India growth story. Flows into retail schemes in CY 2022, continue to show month-on-month increase, led by rising SIP contribution, which for March 2022 are at an all-time high at ₹12,328 crore, and with the economy opening up due to tapering COVID prevalence in the country”.

Further, monthly SIP Contribution collected reached an all-time high at ₹12,328 crore owing to investor faith in the SIP as an instrument and the resilience to stay invested in current market conditions. This also reflects that investors have been renewing and investing in new SIP in for the next financial year.

Apart from equities, passively managed funds continue to attract significant investors interest. During the month, 15 index funds and 5 Other ETFs funds were launched which cumulatively accumulated ₹3,691 crore. However, existing funds also continue to witness strong net inflows. In March 2022, Index Funds and Other ETFs category received net inflow of ₹19,219 crore.

However, the debt segment saw a net outflow of ₹1.15 lakh crore last month, after witnessing a net inflow of ₹8,274 crore in February.

Overall, the mutual fund industry registered a net outflow of ₹69,883 crore in March, as compared to a net infusion of ₹31,533 crore in the preceding month.

The outflow pulled down the average assets under management (AUM) of the industry to ₹37.7 lakh crore at the end of March, from ₹38.56 lakh crore at February-end.