Investors continued to pump money into mutual funds last month, although at a slightly slower pace.
The total assets managed by mutual funds increased 1.9 percent on a month-on-month basis to Rs 33.7 trillion in June, led primarily by an increase in equity funds, arbitrage funds and balanced funds.
As the stock markets touched a new high, however, flows into equity funds slowed as investors booked profits and rebalanced portfolios, experts suggested.
Equity assets under management, including equity-linked savings schemes and index funds, of domestic mutual funds increased 3.7 percent month-on-month to Rs 11.5 trillion in June.
On a month-on-month basis, the weights of technology, capital goods, healthcare, automobiles and insurance increased, while the weights of private banks, oil & gas, public sector banks and telecom moderated, a report from Motilal Oswal showed.
In the large-cap space, fund managers increased stakes in Indus Towers, Havells India, SBI Cards & Payment Services, JSW Steel and Muthoot Finance. They sold Hindustan Zinc, Adani Enterprises, NMDC, Dabur India and Titan Company, data from ICICIdirect showed.
In the midcap space, fund managers increased holdings stakes in Sona BLW Precision Forgings, Shriram Transport Finance, Indian Bank, TVS Motor Company and Zee Entertainment Enterprises.
In small-caps, fund managers raised stakes in IPO names such as Dodla Dairy and Krishna Institute of Medical Sciences. Other stocks in which fund managers raised stakes included Orchid Pharma, Shyam Metalics & Energy and Zensar Technologies.
Systematic Investment Plans (SIP)
The number of systematic investment plans in various schemes of mutual funds went up to 40.2 million in June from 38.8 million in May. SIP contributions went up to Rs 9,155 crore last month from Rs 8,818 crore in May.
Experts said money flow into mutual funds will continue as the stock markets continue to hit fresh highs and interest rates decline.
“Equity funds have witnessed inflows in June. In the last two months, the Nifty has delivered a double-digit return versus conventional investment options such as bank fixed deposits, which have been hovering around 5-7 percent (the comparison is for illustration purposes only),” said Yogesh Patil, head – equity, LIC Mutual Fund Asset Management. “We do see deposit rates hovering at the current level based on the commentary of various bank managements. Thus, depending on individual investment objectives, we believe fund flows to equity mutual funds should see further acceleration.”
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