Despite outflows from debt funds, the assets under management by Indian mutual funds rose to Rs 37.72 trillion as on December 31, 2021 compared to Rs 37.33 trillion as on November 30, 2021. Equity funds saw net inflows of Rs 25,076 crore in December compared to Rs 11,614 crore in November 2021, as per monthly data released by Association of Mutual Funds in India (AMFI).
Systematic investment plans (SIP) remained the preferred mode of investments for many retail investors. For the month of December 2021, monthly SIP contribution stood at Rs 11,305 crore compared to Rs 11,004 crore reported in the previous month. SIP accounts also went up to 4.90 crore from 4.78 crore in November 2021.
“SIP has been the favourite medium of consistent investing and disciplined mode of savings by the common man. This is evident from the number of accounts rising. Through regular financial literacy retail investors are understanding the nuances of managing market volatility and risk adjustment through SIP. Overall 2021 has ended in rise in disciplined investing through rise in number of SIP investments,” says N S Venkatesh, Chief Executive, AMFI.
Among equity funds, multi-cap funds got maximum net inflows of Rs 10,516 crore in December. This is largely attributable to three new fund offers which raised Rs 9,509 crore. Three new fund offers in thematic fund category also raised Rs 2,937 crore. All thematic and sectoral funds got new inflows of Rs 3,769 crore.
Flexicap funds were also preferred by many investors as they received net inflows of Rs 2,408 crore. All equity fund categories saw net inflows in December 2021. “Investors are using dips to increase their investments in equities. It talks about the positive undertone. Consistently high inflows in balanced advantage funds speaks about the reasonable long term expectations set by the investors at a time when the valuations of equities are on the higher side,” says G Pradeepkumar, CEO, Union Mutual Fund.
Among hybrid funds – mutual fund schemes that invest across asset classes such as equity, debt, gold in varying proportion, balanced advantage funds got net inflows of Rs 3,792 crore in December. Balanced advantage funds invest in a mix of bonds and stocks taking into account the relative attractiveness of both these asset classes.
Nirav Karkera, Head of Research, Fisdom says, “Rising SIP accounts and consistent inflows in broad-mandate categories like multicap and balanced advantage funds reflect strengthening retail participation.”
Arbitrage funds is the only category of schemes from hybrid funds which saw outflows of Rs 4,303 crore in December 2021. Arbitrage funds got net inflows of Rs 1,045 crore in previous month. Expectation of increased volatility in stock markets going forward can be one of the reasons why investors chose to stay away from these schemes. Arbitrage funds gave relatively muted returns of 0.17 percent in December compared to 0.41 percent in November 2021.
Debt funds saw net outflows of Rs 49,154 crore in December 2021 compared to net inflows of Rs 14,893 crore. The outflows in December are attributed to the withdrawals done by corporate investors towards fulfilling obligations like payment of taxes, payment to vendors at the end of quarter. Among debt funds, low-duration schemes saw highest net outflows of Rs 11,067 crore.
Overnight and dynamic bond funds saw net inflows of Rs 4,730 crore and Rs 1,039 crore respectively. “Debt market participants worry in the face of rising inflation. To maintain asset allocation to fixed income, some investors may have shifted to dynamic bond funds among other options,” says Karkera.
Gold exchange traded funds and other exchange traded funds saw net inflows of Rs 313 crore and Rs 13,550 crore, respectively. Six ETF NFO including that of Bharat Bond ETF-April 2032 raised Rs 6,409 crore.Investors are seen investing through SIP to route to invest in equity funds to reduce the timing risk involved.