60% rise in equity fund redemptions in November over the previous six-month average
The latest report on inflows in mutual funds showed a sharp decline in net inflows into equity schemes, including the tax-saving equity-linked savings schemes. Equity schemes had witnessed net inflows of Rs6,026 crore in October 2019, and the previous 6-month average net inflow was Rs7,162 crore. However, net inflows as on November had fallen to Rs1,312 crore, a fall of 82% from the 6-month average.
The gross inflows were Rs17,581 crore in November, against Rs17,074 crore in October and the previous 6-month average of Rs18,052 crore. However, gross redemptions had rose to Rs16,269 crore in November, against Rs11,048 crore in October and previous 6-month average of Rs10,890 crore.
Hence, the fall in net inflows was due to an increase in the gross redemptions, touted as a profit-booking move by the Association of Mutual Funds of India on the back of a bullish market. The equity market barometer S&P BSE Sensex has risen more than 12% in 2019, up till November-end.
Another point of concern for the industry was the inflows through systematic investment plans. Investing through SIP is often the preferred method by retail investors.
The SIP inflows have stagnated or grown slowly since October 2018. SIP inflows in November were reported at Rs8,273 crore, against Rs8,246 crore in October and past six-month average of Rs8,228 crore. This is despite the net addition of around 5 lakh new SIPs each month.
Total number of SIP accounts climbed further to 2.94 crore, an addition of 5.33 lakh accounts during the month. The asset under management (AUM) via SIPs jumped to Rs3.12 lakh crore, up from Rs3.03 lakh crore in the last month.
The total AUM (assets under management) of mutual funds in India rose to a new high of Rs27.04 lakh crore in November from Rs26.32 lakh crore in October.
Large-cap oriented equity schemes gained the most net inflows of Rs1,197 crore followed by mid-cap schemes which attracted Rs802 crore. The equity schemes which saw the highest outflows were value- and contrarian-style schemes which saw net outflow of Rs955 crore. The schemes in the value- and contra-category had been underperforming a lot even when the broad market was soaring.
Among other scheme types, balanced (aggressive hybrid) schemes also faced massive outflows of Rs4,931 crore in November.
Debt-based schemes continued to attract large sums in November. Corporate bond funds garnered Rs2,581 crore in net inflows, whereas the relatively safer banking & public sector debt funds garnered Rs7,230 crore.
Broadly, the safer money-market scheme categories all enjoyed net inflows. However, the riskier categories like credit risk, medium-duration, medium-to-long duration and dynamic bonds saw net outflows.