NEW DELHI: Extreme volatility in equity markets and concerns over high valuations seem to have deterred investment in equity mutual funds in August.
Net inflows into equity funds fell to an 1-month low of Rs 6,119 crore. This is the lowest net inflows into equity mutual funds since October 2021, when such funds received a net Rs 5,214 crore.
From November 2011 to June 2022, equity mutual funds were consistently receiving net inflows of Rs 10,000 or more. In March this year, inflows in equity funds had peaked at Rs 28,500 crore. “There is usually a psychological tendency amongst domestic investors to book profits near all-time highs (especially when the markets have corrected post hitting similar levels in recent past), which is also getting reflected in the lower quantum of inflows,” Arun Kumar, Head of Research, FundsIndia.
The BSE Sensex crossed 60,000 levels on 17 August from the low of 51,360 on 17 June. Both the Nifty and Sensex were trading around 23 price-to-earnings ratio.
However, the moderate inflows into equity funds were compensated by strong inflows into debt funds, which received a net of Rs 49,000 crore against Rs 4,930 crore in July. This helped the mutual fund industry post a healthy net inflow of Rs 65,000 crore.
The net asset under management (AUM) of the mutual fund industry at the end of August was Rs 39.33 lak crore, which is 7% higher than the same month last year. Monthly SIP contribution in August was at Rs 12,693.45 crores.
The number of SIP accounts stood at all-time high 5.71 crore at the end of August, crossing the June 2022 high of 5.61 crore.
SIP AUM at the end of August 2022 stood at Rs 6.40 lakh crore. Over 21 lakh new SIPs were registered during the month.