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Inflows Into Equity Mutual Funds Decline In April Amid Second COVID Wave

The mutual fund industry witnessed an inflow of Rs 92,906 crore across all segments during the period under review compared to an outflow of Rs 29,745 crore in March.

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Equity mutual funds witnessed a net inflow of Rs 3,437 crore in April, making it the second consecutive monthly infusion but lower than the amount recorded in March amid the second COVID wave.

The quantum is much lower than the inflow of Rs 9,115 crore recorded in March, according to data from the Association of Mutual Funds in India released on Tuesday.

Equity schemes had consistently witnessed outflow for eight straight months from July 2020 to February 2021.

'The net flows into equity funds have continued, which is very encouraging. Flows slowed down a bit compared to March largely because of the disruption caused by the second wave of the pandemic,' G Pradeepkumar, CEO of Union AMC, said.

He also said the flow is expected to pick up pace once the pandemic is brought under control through increased levels of vaccination and other measures.

Making a similar statement, Arun Kumar, Head of Research at FundsIndia, said the inflow trend remains positive while the recent spike in covid cases is a concern and we need to monitor the impact on investor sentiment and behaviour in the near term.

'With the second wave of the coronavirus pandemic putting pressure on citizens to hold a higher emergency corpus for medical needs, investor interest is a tad down and can be expected to recover in the waning phase of this health scare,' Gopal Kavalireddi, Head of Research at FYERS, said.

Apart from equities, investors infused over Rs 1 lakh crore in debt mutual funds in April after withdrawing Rs 52,528 crore in March, on the back of strong inflows into liquid, money market and overnight segments.

Overall, the mutual fund industry witnessed an inflow of Rs 92,906 crore across all segments during the period under review compared to an outflow of Rs 29,745 crore in March.

As per the data, inflow into equity and equity-linked open ended schemes was at Rs 3,437.37 crore in April.

Barring multi cap, dividend yield fund, value fund and equity-linked saving schemes categories, all the equity schemes saw inflows last month.

The categories which received significant flows were Mid Cap, Large & Mid Cap and Large Cap.

'The volatility and intermittent corrections in the markets, on the back of concerns over the intense second wave of coronavirus pandemic and its possible impact on the economy, provided investors a good investment opportunity/ entry points during the month,' Himanshu Srivastava, Associate Director – Manager Research at Morningstar India, said.

However, while the quantum of redemption was almost the same as last month, the fund mobilised was lower than that in March suggesting some of the investors would have preferred to stay on the sidelines until more clarity emerges around the impact of second wave of the pandemic on the economy, he added.

Additionally, he said that few investors would have also held back their investments in anticipation of market correction given the ongoing concerns.

Overall, equity schemes had witnessed an outflow of Rs 4,534 crore in February, Rs 9,253 crore in January, Rs 10,147 crore in December, Rs 12,917 crore in November, Rs 2,725 crore in October, Rs 734 crore in September, Rs 4,000 crore in August and Rs 2,480 crore in July, which was their first withdrawal in over four years. Prior to this, such schemes had attracted Rs 240.55 crore in June.

Contributions to systematic investment plans remained robust at Rs 8,591 crore last month compared to Rs 9,182 crore inflow in March. March's SIP numbers included flows of last two days of February.

Further, Gold Exchange Traded Funds (ETFs) witnessed a net inflow of Rs 680 crore last month compared to Rs 662 crore in March.

Within the debt schemes, liquid funds saw inflow to the tune of Rs 41,507 crore followed by money market (Rs 20,286 crore) and overnight (Rs 18,492 crore) funds.

The inflow pushed the asset under management of the mutual fund industry to Rs 32.38 lakh crore at the end of April from Rs 31.43 lakh crore in March. 


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Mutual Funds (MF) Second COVID wave vaccination