Strong inflows in new fund offers (NFOs) and a stable SIP book helped equity mutual funds attract a net investment of nearly Rs 40,000 crore in the three months ended September 2021, a two-fold growth from the preceding quarter.
The inflow pushed the asset base of equity mutual funds (MFs) to Rs 12.8 lakh crore by September-end, from Rs 11.1 lakh crore at the end of June, data with the Association of Mutual Funds in India (Amfi) showed.
As per the data, the equity category witnessed flows to the tune of Rs 39,927 crore in September quarter, as compared to an inflow of Rs 19,508 crore in the June quarter.
Equity mutual funds have been witnessing continuous inflows since March. Prior to this, equity schemes had consistently witnessed outflows for eight months from July 2020 to February 2021.
"Consistent equity inflows indicate positive sentiment among investors on the Indian equity market as the economy gains momentum, businesses rebound from pandemic disruption, abundant liquidity in the financial system and government's supportive stance aiming at speedy economic recovery," Mohit Nigam, Head - PMS, Hem Securities, said.
During recent months, India's benchmark has gained the most among its Asian peers, making India one of the most favourable investment corners, he said.
According to him, overall, data looks positive for the industry as equity and SIP numbers look supportive of more investor participation in mutual funds. Barring equity-linked saving schemes (ELSS) and value funds, all the categories have seen inflow during the September quarter.
The slew of heavyweight New Fund Offers and stable systematic investment plan (SIP) books have played a critical role in mobilising fresh inflows in equities.
Mutual fund experts said that nearly 50 per cent of net inflow in equity is attributable to NFOs as asset management companies (AMCs) try to complete their range as per markets regulator Sebi scheme categorisation norms and some more through thematic launches.
Within the categories of equity funds, flexi-cap segment saw a highest net infusion of Rs 18,258 crore, followed by sectoral funds that witnessed a net investment of Rs 10,232 crore and focused funds that attracted Rs 4,197 crore. Further, multi-cap and mid-cap funds witnessed net inflow to the tune of Rs 3,716 crore and Rs 3,000 crore respectively.
Moreover, investment through the SIP route surged to Rs 29,883 crore in the September quarter from Rs 26,571 crore in the June quarter. Besides, monthly contributions to SIPs rose to an all-time high of Rs 10,351 crore in September from Rs 8,596 crore in April.
Good news on the SIP front continues with monthly input value finally crossing Rs 10,000 crore in September. This is heartening as this is a significant jump from Rs 8,000 crore the SIP book had shrunk to a year back.
"This clearly highlights the improving appetite from retail as well as HNIs," Aashwin Dugal, Co-Chief Business Officer, Nippon India Mutual Fund said. With lower yields in debt instruments including banks FDs and flat returns in gold, equity is a preferred asset class, he added.
SIP is an investment vehicle that allows investors to invest small amounts periodically instead of lump-sum payments. The frequency of investment is usually weekly, monthly or quarterly. It is similar to a recurring deposit where investors deposit a small or fixed amount every month.
Overall, mutual funds have seen a net inflow of Rs 99,974 crore in three months ended September, from Rs 69,625 crore in the previous quarter.