Equity mutual fund inflows revive in December

Inflows into equity mutual funds revived in December after a three-month decline as investors pumped money into these products afresh with the stock market hitting record highs during the month.

Investors put Rs 4,499 crore into equity schemes in December compared to Rs 1,311 crore in November — the lowest monthly flows in three-and-a-half years. Assets under management of the industry fell by Rs 61,810 crore to Rs 26.54 lakh crore on account of outflows from debt schemes.

Flows into mutual fund schemes through Systematic Investment Plans (SIP) continued to remain strong at Rs 8,518 crore — the highest ever in a month, an addition of Rs 245 crore over the previous month. This is the 13th successive month in a row where SIP inflows remained north of the Rs 8,000-crore mark.

“The sustained rally in the large cap stocks has probably helped to build confidence among investors,” says G Pradeepkumar, CEO, Union Asset Management. Among various categories, large caps saw inflows of Rs 1,135 crore, midcap schemes got Rs 796 crore and small cap received Rs 421 crore.

In October, equity mutual fund schemes had seen inflows of Rs 6,026 crore, while in September and August, these products attracted Rs 6,609 crore and Rs 9,152 crore respectively.

“It has been a good reversal. We have seen money across all major categories of equity funds,” says Swarup Mohanty, CEO, Mirae Asset Management.

The outflow from balanced funds, which invest 65-75% of their money into equities, continued in December. The category saw outflows of Rs 2,040 crore. In November, the category saw outflows of Rs 4,932 crore.

Debt funds saw outflows of Rs 78,426 crore due to quarter-end redemptions primarily from liquid and overnight funds.

“In the fixed income space, we saw a continued preference for high quality short end categories like banking and PSU debt funds and short duration funds,” says Vishal Kapoor, CEO, IDFC MF.

Among debt funds, banking and PSU funds that primarily invest in a portfolio of AAA companies saw strong inflows of Rs 4,770 crore. Investors continued to shun credit risk funds with the category seeing outflows of Rs 1,191 crore.

Overnight funds and liquid funds saw outflows of close to Rs 80,000 crore as corporate investors withdrew due to quarter-end considerations. Arbitrage funds, which invest in a mix of shares and stock futures, saw inflows dip to Rs 612 crore compared to Rs 5,353 crore in the previous month.