There were just two months in FY12-13 where equity mutual fund scheme inflows were positive. Heavy outflows over the previous months led to the highest outflows for a particular financial year
After nine months of consecutive net outflows, equity mutual fund witness a positive net inflow of Rs768 crore in March on the back of lower redemptions and higher sales of tax-saving schemes. Despite the positive inflows into equity schemes coming in the last month of the financial year, the year FY12-13 saw the highest outflows, which was as high as Rs14,766 crore. The last time equity schemes witnessed such a massive outflow was in FY10-11 where the net outflow reached Rs13,139 crore. In FY11-12, equity schemes witnessed an inflow of Rs122 crore. Despite a slew of reforms brought in by the regulator to increase retail participation in mutual fund schemes, the new reforms seem to have had little effect on the net inflows. Sales have been decreasing year-on-year for the past two years. Total sales in FY12-13 amounted to Rs43,364 crore, down nearly 35% from FY10-11 when total sales touched Rs66,592 crore.
Moneylife has constantly been highlighting the huge decline in folios over the past few months as well. The month of March once again saw an exodus of over two lakh folios. The total number of equity folios declined by over eight lakh in the last quarter of the FY12-13. At the end of FY11-12 the total number of equity folios stood at 3.76 crore, and since then the number of folios have declined by over 45 lakh to 3.32 crore as on 31 March 2013.
Equity mutual fund schemes, after a net outflow of over Rs1,500 crore over the past nine months, finally saw a month of positive net inflows. Sales of equity schemes touched Rs4,226 crore in March 2013, significantly higher compared to February 2013, where sales touched Rs3,713 crore. Equity linked savings schemes (ELSSs) which contributed 14% to the total equity mutual fund scheme sales, peaked to Rs596 crore, the highest sales for a month for the past in two years. Sales of tax-saving schemes usually peak in the last quarter of the financial year, the quarter sales improved compared to the same quarter last year. A new tax-saving avenue was opened up for first time investors in the form of Rajiv Gandhi Equity Savings Schemes (RGESSs). The six schemes that were launched during this period brought in Rs242 crore.
The introduction of direct plans seemed to have had some positive impact in equity fund flows. In January 2013, the direct route bought in Rs114 crore to equity schemes, contributing as much as 9% to the total equity inflows, according to a recent report from Karvy Computershare (Read: Mutual fund direct plans bring in significant inflows during the first month of launch). This was significantly higher compared to the month of December 2012 when there was no incentive to invest through the direct route. Just 3% of the contributions came from the direct route in December 2012, which was a total of Rs32.88 crore.
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