Equity funds post third straight month surge in May

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Vibrant stock markets helped the industry receive a net inflow of Rs.10,083 crore in May 2021 into equity funds.

Redemptions were also lower in May 2021 compared to April 2021. In addition, three new equity fund offerings launched in May received Rs 3,125 crore.

“Domestic institutional investors and retail investors have kept markets dynamic over the past three months when foreign institutional investors (FIIs) have been net sellers. As a result, Indian markets are now more diverse with more participants, thereby reducing volatility and vulnerability to FII sentiments, ”said Akhil Chaturvedi, Head of Sales and Distribution, Motilal Oswal Asset Management Company.

Entries to systematic investment plans (SIPs) increased from Rs 8,596 crore in April 2021 to Rs 8,819 crore in May 2021. The number of SIP accounts increased from 3.79 crore to 3.88 crore during the same period.

NS Venkatesh, CEO of AMFI, said: “The contribution focused on retail equities continues to be on the uptrend, driven mainly by net flows mainly in arbitrage, multicap and midcap regimes, as well. as through intelligent diversification in fund of fund schemes that invest in foreign equities. Retail SIP Accounts, SIP AUMs and SIP Contribution, which signify retail activity in the mutual fund industry, experienced a continuing uptrend for the second month of this fiscal year, leading to a record high of Rs 33.05 lakh crores and 10 crore folios. “

Hybrid

The hybrid category received a net inflow of Rs 6,217 crore in May 2021. Arbitrage funds received the bulk of the inflows worth Rs 4,521 crore. Dynamic Asset Allocation / Balanced Advantage funds received Rs 1,363 crore. Conservative hybrid funds, which invest up to 25% in stocks, received Rs 395 crore.

Funds of funds investing abroad

This category is gaining ground. In one year, the category received net entries worth Rs 11,000 crore. Recently, the Securities and Exchange Board of India (SEBI) increased the investment limit in foreign titles for fund houses from $ 600 million to $ 1 billion per fund house.

To take advantage of the growing appetite for international funds, fund houses are lining up such funds. White Oak Capital CEO Aashish P Somaiyaa says investors should exercise caution when investing in international funds at this point. “Basic recency bias is an upward trend in the flow of money into international funds and investors should beware of the trend following the accumulation of more and more money in technology stocks in developed markets. in the late stages of a multi-year boom. “

Debt

After witnessing net inflows worth Rs 1 lakh crore in April 2021, debt funds recorded net outflows worth Rs 44,512 crore in May 2021, mainly due to huge liquid and day-to-day cash outflows. Investors are heading towards the short end of the curve, which is evident by entries in categories such as low duration, money market and super short term funds.

“After witnessing constant net outflows, the credit risk fund received a net inflow of Rs 258 crore. The improvement of the scenario on the bond side would have encouraged investors to take a calculated risk by allocating part of their investments in credit funds. The mid-term category also received net inflows of Rs 407 crore, which was higher than the net inflow of Rs 339 crore recorded in April. The category saw its credit profile improve, which, given the scenario prevailing in the debt markets, would have attracted investors. Bank funds and PSUs posted net outflows again this month, which could be the result of new guidelines on valuations and fund exposure standards for AT1 bonds, ”said Himanshu Srivastava, Managing Partner – Manager Research, Morningstar Investment Advisers India.

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