Inflows into equity mutual funds (MFs) slumped 95 % to a little more than ₹240 crore in June as investors pulled out from large and multi-cap funds due to profit booking.
This is the third consecutive monthly decline in inflows into equity MFs, Association of Mutual Funds in India (AMFI) data showed on Wednesday.
Overall, the MF industry witnessed a net inflow of ₹7,265 crore across all segments last month, much lower than the ₹70,813 crore in May, primarily due to outflow from liquid funds.
Inflow into equity and equity-linked open ended schemes was at ₹240.55 crore in June as against ₹5,256 crore in May, translating into a decline of 95%.
Union AMC CEO G. Pradeepkumar said the drop in net flows into equity funds could be attributed partly to profit booking on the back of the rally witnessed in equity markets in June.
Multi-cap, large-cap and value funds saw outflows to the tune of ₹777 crore, ₹213 crore and ₹136 crore, respectively, during the month under review. However, equity linked saving schemes (ELSS) attracted ₹587 crore.
“The flows into ELSS category were the highest during the month,” said Morningstar India associate director – manager research Himanshu Srivastava. “The reason could be twofold. With the date for making tax-saving investments extended due to COVID-19 pandemic and the ensuing disruptions, investors got more time on hand to plan their tax saving investments and are now investing.
“Additionally, with markets at attractive levels, many investors would have already started their tax-saving investments for the current financial year, which is a positive trend,” he added.
Inflow through systematic investment plans (SIP) dropped below ₹8,000 crore for the first time since November 2018. Net SIP investments stood at ₹7,927 crore against ₹8,123 crore in May.
“The monthly SIP contribution slowing down is worrying, but it is not completely unexpected, given the strain on cash flows and incomes experienced by many investors on account of the COVID-19 situation.
Once the economic situation improves, the flows should also pick up,” Mr. Pradeepkumar said. Debt funds saw an inflow of ₹2,862 crore in June.
Assets under management at the industry rose to ₹25.5 lakh crore, from ₹24.55 lakh crore at the end of May.