Equity inflows into mutual funds have seen a consecutive slump since the October 2018 and are at their lowest levels since four months. The equity inflows into mutual funds stood at ₹12,622 crore in October 2018, ₹8,414 crore in November 2018, ₹6,606 crore in December 2018 and ₹6,158 crore in January 2019. Since October 2018, the inflows have slumped by 51%.
Going by year-on-year figures, equity inflows into mutual funds have slumped 60% since January 2018. But SIP inflows have consistently increased since the start of the financial year, rising 20% to ₹8,064 crore in January 2019 from April 2018.
Why the change?
“People invested dramatically in mid cap funds that have not performed well in the last 1-1.5 years. Some are even down 15-20%," said Swarup Mohanty, chief executive officer of Mirae Asset Global Investments (India) Private Ltd. “The industry also saw an outflow into hybrid funds, which generally claim to provide monthly dividends but of late those dividends also stopped and there has been an outflow in this category too," said Mohanty. “After a good run of three years, mid-caps have not performed well in the past one year and these investors who are redeeming now had joined in the end of those three years. SIPs will continue to witness higher inflows," he said.
Experts suggest that there is no need to worry. The macros are doing well: rupee, oil and inflation are under control, GST collections were over ₹1 trillion, so while people should be investing in equities, we are seeing the contrary, said Mohanty. “Since investors enter in equities based on past or recent returns, the inflows have sunk in equity. Hence people are staying away, but what people should do is invest in equities as the valuations are not moderate, in flows into emerging markets has risen, earnings estimates for upcoming quarters is also up," said Lovaii Navlakhi, founder at International Money Matters Private Ltd.