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Retail investors turned cautious in August and continued to post profits as stocks hit new highs. Even though net inflows into equity-based schemes in August held steady at Rs 8,666.68 crore, according to data released by the Association of Mutual Funds of India (Amfi), it was 61.6 % lower than inflows of Rs 22,583.52 crore in July. Buybacks in August remained high at Rs 25,002 crore as retail investors continued to withdraw money from some stock programs.
According to NS Venkatesh, Managing Director of Amfi, the strong monthly mobilization in arbitrage, dynamic asset allocation, thematic / sectoral and diversified flexicap has eclipsed profit taking in recent months.
Targeted and flexi cap funds have found favor with investors, with maximum entries in these categories. In contrast, investors withdrew Rs 613 crore from Value / Contra funds, Rs 778 crore from ELSS funds and Rs 162 crore from Smallcap funds in August.
Industry experts believe that as existing investors move from pure equity programs to less risky categories, new investors are entering the market with hybrid funds. Fund houses continued to launch new fund offerings in the balanced advantage category during the month, which helped generate inflows.
Gautam Kalia, Head – Investment Solutions, Sharekhan by BNP Paribas, said: “The rally in the markets has attracted many conservative investors to enter the market as well, which explains the steady growth of the hybrid fund category since the start of This year. Dynamic asset allocation funds saw the maximum inflow this month.
Although flows may have declined compared to July, it is clear that the pandemic has whetted the appetite of retail investors for equities. Data show that retail investors now account for 46.87% of total industry assets under management of Rs 36.59 lakh crore. As of April 2021, 53 new systematic investment plan accounts have been added, bringing the total of SIP accounts to 4.32 crore. New SIPs registered in August amounted to 25 lakh, which is the highest monthly record on record. SIP AUMs now stand at Rs 5.26 lakh crore, which is a third of retail AUM.
The industry’s total assets under management crossed the 36 lakh crore mark for the first time in August, driven by inflows from retail investors. Corporate flows to loan programs remained anemic at Rs 1,074 crore. Liquid and overnight funds saw cash outflows during the month.
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