Inflows into equity, income funds surge

Aided by interest rate cut and other factors, MF sector poised to grow 17-18% in FY20, says AMFI’s CEO

Equity mutual fund schemes snapped a four-month decline in flows in March leading to a marginal increase in the overall assets of the fund industry in the last month of the financial year. Income funds also saw a huge jump in inflows for the month.

According to data from the Association of Mutual Funds in India (AMFI), equity schemes saw net inflows of ₹9,014 crore in March, which was more than double the previous month’s net inflows of ₹3,948 crore.

If the cumulative inflows of equity and equity-linked savings schemes are taken into account, the month saw net inflows of ₹11,756 crore, higher than February’s ₹5,122 crore, which was the lowest since January 2017.

On an overall basis, the assets under management (AUM) of the mutual fund industry grew to ₹23.80 crore in March, marginally higher than previous month’s ₹23.16 crore, while registering a 11% increase on an year-on-year basis that also saw folios rising 16% to touch 8.25 crore.

“The mutual fund industry, in one of the most difficult and uncertain years, marked with acute market volatility, credit events and border tensions, has done exceedingly well, with overall industry growing by 11% and retail by 14%,” said N.S. Venkatesh, CEO, AMFI.

“With interest rates easing and impact of credit events almost normalised, and macro-economic indicators showing healthy uptrend, the mutual fund industry is poised to grow at 17-18% in 2019-20,” he added.

Income funds

Meanwhile, income funds also saw a strong surge in March, registering net inflows of ₹13,856 crore as against ₹2,080 crore in the previous month. Mr. Venkatesh attributed the flows into income funds to the recent rate cut by the Reserve Bank of India and its dovish stance that made investors stay invested in such schemes.

The financial year 2018-19 saw total inflows from systematic investment plans (SIPs) of ₹84,638 crore, which was higher than the previous fiscal’s net inflows of ₹67,190 crore. Further, the number of SIP accounts as on March 31, 2019 was pegged at 2.62 crore — a little over 24% higher than 2.11 crore as on March 31, 2018.

Incidentally, liquid and money market schemes continued to see huge outflows, affecting the overall rise in the AUM of the mutual fund. In March, such schemes reported outflows of ₹51,343 crore, following last month’s outflows of ₹24,509 crore.

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