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March 13, 2020

Investors flock to equity funds on declines, rush for safe haven gold

Open ended equity-oriented mutual fund schemes saw net inflows of Rs 10,796 crore in February, the highest monthly inflow into the category in the current fiscal (the Association of Mutual Funds in India (Amfi) started disclosing fund flow data as per new categorisation this fiscal). The net inflow into the broad category surged as investors looked to take advantage of the recent sharp declines in the stock market due to worries that the frightening spread of Novel Coronavirus (Covid-19) across the world may result in a global economic slowdown. The equity markets represented by the Nifty 50 fell more than 6% during the month. At the aggregate level, the open-ended equity fund assets under management (AUM) declined 4.1% to settle at Rs 7.57 lakh crore weighed by mark-to-market (MTM) losses.

 

In addition to value buying, a large part of the net inflow was also the sticky money coming through systematic investment plans (SIPs) into equity-oriented mutual funds. As per the Amfi data, SIP net inflows in February stood at Rs 8,513 crore, slightly lower than the record high seen in the previous month. In fact, throughout the fiscal, inflows into SIP have been stable, which, in turn, steadied the money flow into equity-oriented schemes even though net inflows remained lumpy and erratic at times.

 

Meanwhile, within the open-ended equity category, multi-cap and large-cap funds saw net inflow of Rs 1,625 crore and Rs 1,607 crore, respectively. Investors also opted for mid-cap and small-cap categories attracted by valuations. Total net inflow into these categories stood at Rs 2,949 crore during the month. Sectoral / thematic funds saw net inflow surge to Rs 1,928 crore – the highest since April 2019, the reason in part was the new schemes launched during the month.