Equity Mfs Inflows At All-time High In March

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With investors continuing to repose faith in the markets despite global geopolitical tensions sparked by the Ukraine crisis, equity-oriented mutual fund schemes garnered net inflows of 28,252 crore comprising both open and close-ended schemes in March, a 44% rise from the previous month, showed data from the Association of Mutual Funds in India (AMFI) issued on Friday.

“Geopolitical tension due to the raging war between Russia and Ukraine and concerns over surging crude prices triggered a sharp correction in the market towards the end of February and early March. This provided investors a good entry point into equities,” said Himanshu Srivastava, associate director —manager research at Morningstar India.

In continuation from the past, collections from systematic investment plans or SIPs recorded yet another month of growth. SIP contributions rose to 12,328 crore in March, an almost 8% rise from 11,438 crore in February.

Given the heightened market volatility due to the Russia-Ukraine conflict and monetary policy tightening by the US Fed, investors are likely opting for SIPs to invest regularly without having to time the market. Monthly SIP collections have risen consistently on a sequential basis since April 2021, except for a dip this February.

All equity-oriented schemes received net inflows in March 2022 with the multi-cap fund category being the biggest recipient with net inflows of 8,170 crore. This was helped by the launch of SBI Multi Cap Fund, which mobilized 8,170 cores, according to Srivastava. The next two big beneficiaries of net inflows were large and mid cap funds, and large cap funds.

The situation was, however, quite the opposite for debt funds which saw net outflows of 1.15 trillion in March. While this was significantly led by liquid funds, it extended to debt fund categories across the board. This was driven by corporates withdrawing money for advance tax payments at the close of the financial year as in the past.

Net inflows into equity MF schemes have been positive since March 2021, maintaining the positive trend for the 13th consecutive month.

With the Securities and Exchange Board of India recently asking mutual fund asset management companies to refrain from launching any new fund offers until the pooling of mutual fund money and units is halted, it will be interesting to watch if the market regulator’s move slows the pace of inflows into equity schemes.

According to N.S. Venkatesh, chief executive, Association of Mutual Funds in India, with the economy and the markets doing well, investors will continue to put money in existing schemes and thereby a tapering of inflows is not anticipated.

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