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Equity mutual funds see net inflows after eight months

Average assets managed by mutual fund industry at all-time high

Mutual funds rep Representational image

India’s growth-oriented equity mutual funds schemes saw Rs 9,115.12 crore in net inflows in March, according to data released by the Association of Mutual Funds of India on Thursday. The inflows into equity funds come after eight consecutive months of outflows and are highest since March 2020.

In February, equity mutual funds had seen net outflows of Rs 4,534 crore.

In March, equity funds saw inflows across most categories including large-cap, mid-cap, small-cap, tax-saving and sectoral funds. Passive funds like index funds and exchange-traded funds and funds investing overseas also saw strong interest, with inflows of Rs 8,197 crore. Most hybrid schemes, including multi-asset allocation funds and hybrid funds, also saw inflows of Rs 6,210 crore last month.

The positive data suggests investors, after booking profits and pulling out money from equity schemes in the backdrop of a sharp rally in stocks since the end of March 2020, have begun reallocating funds to equity.

“While, it's too early to make any conclusions, it seems like equity investors waiting on the sidelines for a market correction have started making allocations taking a long-term investing view on equities, as should be the case,” said Kaustubh Belapurkar, director – manager research, Morningstar India.

Additionally, the quantum of redemptions was lower for the month, suggesting profit booking and or reallocation to other asset classes had also slowed down, he added.

Even as equity funds saw net inflows, fixed-income funds saw net outflows barring a few categories like overnight funds, corporate bond funds, floater funds and dynamic bond funds. The total outflows from debt funds in March stood at Rs 52,528 crore, compared with inflows of Rs 1,735 crore in February.

Belapurkar pointed that categories such as liquid funds, low duration and ultra-short duration funds, which typically invest in debt with shorter maturities witnessed outflows as is typically observed during the end of a quarter.

The average assets managed by the mutual fund industry as of March 31, 2021 stood at close to Rs 32.17 lakh crore, a record high, this was 30 per cent more than the Rs 24.70 lakh crore a year ago.

NS Venkatesh, the CEO of AMFI noted that the number of unique investors rose 10 per cent from a year ago and stood at 2.28 crore as of March 31, 2021. There is also a rising acceptance for mutual funds from tier II and tier III towns, he noted.

Mutual Fund assets under management from beyond the top 30 cities surged 54 per cent in 2020-21 to Rs 5.35 lakh crore as of March 31, 2021, according to Venkatesh.

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