Even as equity markets have been very volatile over the last few months and investors may have become somewhat cautious in direct equity investments in the last few months, the appetite for mutual funds, particularly via the systematic investment plan or SIP route continues to grow.
According to data from Association of Mutual Funds of India (AMFI), mutual funds received Rs 80.22 billion worth money via SIPs in December 2018, which is almost 21 per cent higher than the Rs 66.44 billion SIP inflows the industry received in January 2018. The number of folios have also continued to rise and crossed the 80 million mark for the first time.
From 40.3 million in December 2014, mutual fund folios have more than doubled to 83.7 million at the end of December 2018.
N.S. Venkatesh, CEO of AMFI points to the success of the awareness programmes run by the industry body as well by the fund houses for the continued rise in retail fund flows.
“Awareness programmes that AMFI runs have influenced the individual asset management companies (AMCs) running their own campaigns, which have also helped in the rise of SIP inflows,” he said.
AMFI has been running the 'mutual funds sahi hain' campaign for some time now and individual fund houses frequently run their own campaigns on advantages of mutual fund investments and SIPs. Many fund houses also conduct regular outreach and education programmes even in small towns regularly.
Venkatesh also said that SIP is a convenient tool for retail investors to come in to mutual funds and invest in equity markets.
Even as the SIP flows have increased, the mutual fund industry saw net outflows of almost Rs 1.37 trillion in December.
Equity schemes saw net inflows of Rs 57.65 billion during the month. Helped by the government's CPSE ETF issue (exchange trade fund of central public sector enterprises), the other ETF category also saw Rs 108.78 billion in inflows in December.
However, the liquid and money market schemes saw huge outflows to the tune of Rs 1.49 trillion, last month.
Venkatesh cites the end of quarter effect and advance tax outflows for the reasons behind the huge outflows from liquid and money market funds. In December 2017, too, there had been net outflows of over Rs 1.38 trillion from these funds.
Overall, between April-December period, mutual funds have seen net inflows of Rs 867.02 billion, which is much lower than the Rs 2.04 trillion inflows the industry saw in the same period, a year ago.
Equity funds have received inflows of Rs 812.11 billion in April-December versus Rs 994.4 billion in the year ago period. As on December 31, the total assets under management of the mutual fund industry stood at Rs 22.86 trillion.
