Equity inflows surge in September despite volatile stocks: AMFI data

Monthly equity fund inflows in September reversed the trend of declining inflows in equity funds, as net inflows jumped 130 percent from the previous month, as per the monthly data released by Association of Mutual Funds in India (AMFI).

Although the bellwether index Nifty 50 lost 3.75 percent in September 2022, inflows in equity funds have been robust despite volatile markets, data showed. Sectoral funds got the maximum inflows of Rs 4,418 core in September, with three new fund offers of thematic or sectoral funds raising Rs 3,823 crore. Flexi-cap funds got net inflows of Rs 2,401 crore whereas Mid cap funds got net inflows of Rs 2,151 crore in September. All equity mutual fund schemes got net inflows in September 2022, underlining investors’ conviction. All equity funds put together got net inflows of Rs 14,099 crore compared to Rs 6,199 crore in the previous month.

Inflows in equity funds went down by 31 percent in August whereas they were down 42 percent in July.

Total assets under management for the mutual fund industry stood at Rs 38.42 trillion as on September 30, compared to Rs 39.33 trillion as on August 31. September marked the end of the first half of financial year for the mutual fund industry.

Investors also preferred to invest through Systematic investment plans (SIP), which are popular among small individual investors as means to allocate money to mutual funds schemes, especially equity schemes.

Contribution through SIP went up to Rs 12,976 crore in September as compared to Rs 12,693 crore in August. The SIP accounts went up to 5.83 crore as on September 30, 2022 compared to 5.71 crore as on August 30, 2022.

Hybrid funds that invest in a mix of bonds, stocks and gold have seen outflows of Rs 2,687 crore compared to outflows of Rs 6,601 crore in previous month. Arbitrage funds continued to see outflows for the fourth consecutive month in September. Investors have been worried about the volatility in the stock market leading to shrinkage in spot future arbitrage. Balanced advantage funds got net inflows of Rs 760 crore in September.

September is the last month of the second quarter and to meet the quarter end obligations such as payment advance taxes, many corporates pull out money from short term schemes.

As expected, the liquid funds saw net outflows of Rs 59,970 crore in September. Overall, debt funds saw net outflows of Rs 65,372 crore compared to net inflows of Rs 49, 164 crore in August.

Ultra short duration funds and low duration funds also saw net ouflows to the tune of Rs 8,453 crore and Rs 7,659 crore, respectively. Money market funds, that invest in money market instruments maturing in less than year also saw selling pressure and the investors pulled out Rs 11,232 crore in September. Gilt funds and Gilt funds with constant maturity of 10 years saw negligible inflows. These funds are used by savvy investors to invest money at the prevailing high yield. Barring overnight funds which saw net inflows of Rs 33,128 crore, other bond funds saw net outflows. “Duration funds are generally affected in a rising interest rate scenario. Hence investors prefer to pull out of debt funds. They may come back when interest rates peak,” says N S Venkatesh, Chief Executive, AMFI.

Gold funds saw net inflows of Rs 330 crore as compared to outflows of Rs 38.14 crore in August. Relatively lower gold prices in international markets have been attracting investors to gold funds. The gold prices in rupee terms however are not down much, thanks to a depreciating rupee. Gold acts as a hedge against volatile financial markets and also helps investors when the rupee depreciates against the US Dollar.

Mutual fund industry launched 21 new fund offers and mobilized Rs 8,374 crore in September.