Net inflows into equity mutual funds fell 16.4% sequentially in April to Rs 18,917.1 crore, as inflows into large and mid-cap funds fell sharply. However, after the blip in March, small-cap funds continued to see strong inflows.
Inflows through systematic investment plans (SIPs) surpassed Rs 20,000 crore for the first time ever in April, according to the data from Association of Mutual Funds in India (AMFI).
The small-cap funds, which had seen rare net outflows in March, saw Rs 2,208.7 crores of net inflows in April. The March outflows were attributed to year-end profit taking due to tax purposes by the industry experts.
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On the other hand, net inflows into large-cap funds fell significantly to Rs 357.6 crore in April from Rs 2,127.8 crores in March. The net inflows into large and mid-cap funds category stood at Rs 2,638.9 crores compared to Rs 3,215.6 crores a month ago.
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Commenting on the record SIP flows in April, A Balasubramanian, managing director and CEO, Aditya Birla Sun Life AMC said, “It shows the mutual fund industry has received higher acceptance from investors to invest their savings and create wealth in the long-term via the SIP route. Investors have understood that goals can be achieved through mutual fund investing as the industry has been able to provide a great experience to the unit holders.”
In April, domestic benchmark index Sensex had risen over 1%, registering its third consecutive monthly gains, while BSE Smallcap index had snapped two-month losing streak to jump nearly 10%.
Despite the volatility induced by General Elections, data showed that retail investors continued to put money in the market.The number of new SIPs registered in April also hit a record 63.65 lakh as the SIP AUM reached Rs 11.26 trillion in April. The SIP inflows for the month stood at Rs 20,371.5 crores, up from Rs 19,270.9 crores in March.
The overall net AUM of the mutual fund industry rose to Rs 57.26 trillion during the month from Rs 53.40 trillion in March. This wasprimarily because of debt funds seeing inflows of Rs 1.89 trillion during the month compared to Rs 1.98 trillion outflows in March due to seasonal factors.
Within equity segment, sectoral/thematic funds continued to garner the highest net inflows at Rs 5,166.1 crores in April as against Rs 7,917.7 crores.
Highlighting the strong inflows in sectoral/thematic funds, Chandraprakash Padiyar, senior fund manager at Tata Asset Management said, “Our recommendation is that diversified funds would be a better bet for the long term over sectoral/thematic funds specially when valuations are on the higher side.”
Working to sort out KYC issues faced by NRIs
AMFI said it is working towards sorting out KYC validation issues faced by NRIs after the new norms that came into effect from Apr 1. The new norms have led to some mutual fund investors not being able to make transactions as their KYC is ‘on hold’. On Thursday, AMFI said 98-99% of transactions were going through, and only 3% of the overall KYCs had ‘on-hold’ status.
Standards for mechanism to prevent front-running in a month
AMFI is set to come out with details of standards for institutional mechanism to prevent front-running by Asset Management Companies in a month. On Apr 30, SEBI announced step to make it mandatory for AMCs to have an institutional mechanism to avoid potential market abuse. While SEBI will form the framework for this, it has asked AMFI to detail the standards for the mechanism.
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