Equity MFs: Equity MF inflows may rise despite turmoil
Flow through systematic investment schemes (SIPs) – similar to banks’ recurring deposits – increased to ₹12,286 crore in May, as against ₹11,863 crore in April.
G Pradeepkumar, CEO, Union Mutual Fund said, “Any sharp fall is being used as an entry point for allocation in equity mutual funds.
Flexicap funds saw the highest collection of Rs 2,939 crore in May, followed by large-cap and large-and-mid-cap categories with inflows of ₹ 2,485 crore and ₹ 2,413 crore respectively. Low cost passive funds, which include both equity and debt funds, saw an inflow of Rs 5,723 crore.
Dynamic Asset Allocation Fund, which invests in a mix of debt and equity based on market valuation, saw inflows of Rs 2,248 crore. Aggressive hybrid funds, which allocate 65-75% of their portfolio to equities, saw an inflow of Rs 1,380 crore.
“Net inflows of the Balanced Hybrid Fund and Aggressive Hybrid Fund category were up 97%, indicating that, with uncertainties over the economic and rate cycles, investors do not want to be left on the wrong foot and reallocate their investments based on their risk appetite. There are more opportunities available,” said Gopal Kavalireddy, Head of Research, Brokerage Fairs.
Net outflow of debt-oriented funds stood at ₹32,722 crore in May 2022, as against ₹54,756 crore in the previous month. Money market funds saw an outflow of ₹14,598 crore, followed by short-duration funds and ultra-short duration funds.
“The outflow is a result of the rising interest rate cycle, in which investors redeem their investments from money markets and short-term funds,” Kavalireddy said. “It remains to be seen whether this money will flow into fixed deposits or come back to equity funds.”
With no Sovereign Gold Bonds (SGBs) for the financial year 2022-23, investors allocated money for gold schemes. Gold ETFs saw an inflow of ₹203 crore as investors bought the yellow metal fearing rising tensions between Russia and Ukraine, surging crude oil prices and rising inflation.