A trade group for the mutual fund industry reported on Monday that investors poured in a record Rs 15,813 crore in August via the systematic investments plans (SIPs) route provided by mutual fund players. The income- or debt-oriented schemes saw a net outflow of Rs 25,872 crore in August, according to the Association of Mutual Funds in India (Amfi).
Its chief executive N S Venkatesh told reporters that the industry’s performance on the debt side was “partially impacted” by the Reserve Bank’s incremental cash reserve ratio (CRR) measure to drain out excess liquidity because such schemes are viewed more from a treasury management perspective by banks as well.
Inflows of SIPs reached their previous monthly high of Rs 15,244 crore in July. At the end of August, according to Venkatesh, SIPs had an overall assets under management (AUM) of Rs 8.47 lakh crore and a record 35 lakh new SIPs had been initiated.
The record-high SIP flows, according to Venkatesh, indicate that retail investors are still making investments in the market. He added that he anticipates the same trend to hold true in the future due to factors like strong economic growth, which will support market sentiment.
As of the end of August, the total AUM for retail investors’ bets on equity and hybrid schemes was Rs 24.38 lakh crore, spread across 12.30 crore portfolios. According to Venkatesh, a record 19.58 lakh SIPs were terminated or reached maturity in August, up from over 17 lakh in July. The overall AUM for the MF sector increased to Rs 46.93 lakh crore in August from Rs 46.37 lakh crore in July.
An individual who participates in a SIP makes periodic investments, such as once per month, starting with Rs. 500. The 43-player sector relies heavily on SIP flows. Venkatesh added that the decline in debt AUMs is not indicative of a trend and could be the result of ongoing treasury operations. AUMs for large cap schemes decreased by Rs 348 crore, according to Venkatesh, who also predicted that this trend would soon reverse itself and be fueled by higher earnings growth.
He asserted that the continuing interest in small and mid-cap equity schemes – they showed growth of Rs 4,264 crore and Rs 2,512 crore, respectively in August – is not an “irrational exuberance” by investors, and pointed out to a 60 per cent dip in asset prices which investors seem to be looking at while taking their calls.
In a first in many months, gold exchange traded funds (ETFs) saw an inflow of over Rs 1,000 crore, which was attributed by Venkatesh to investors taking advantage of a dip in bullion prices lately. Industry players launched a total of 14 new fund offerings in August, through which they mobilised Rs 7,531 crore, as per the Amfi data.
