Mutual fund assets surge on higher flows into liquid schemes

Mumbai: Assets under management of the Indian mutual fund industry surged by Rs 1.33 lakh crore or 7.4 per cent on a monthly basis to touch a record Rs 26.33 lakh crore in October this year, aided primarily by inflows of Rs 93,202 crore in liquid funds. Retail investors continued to invest through the SIP route, pouring in Rs 8,245 crore compared with Rs 8,262 crore in September 2019. This is the eleventh month, where SIP inflows are hovering above the Rs 8,000-crore mark.

However, lumpsum flows — Rs 6,026 crore in October against Rs 6,609 crore in the previous month — into equity mutual funds have slowed down. Net inflows into equity funds were at Rs 9,152 crore in August and Rs 8,112 crore in July.

“Investors continue to prefer the SIP route for equity mutual funds. Fresh investments through the lumpsum route have been lukewarm,” said Jimmy Patel, CEO, Quantum Mutual Fund.

Among the debt funds, banking and PSU debt funds, which primarily invest in a portfolio of AAA companies, saw inflows to the tune of Rs 4,855 crore. Investors continued to shun credit risk funds with the category seeing outflows of Rs 1,382 crore. Credit risk funds, which invest in riskier debt securities, saw outflows of Rs 17,517 crore since April 2019.

Despite the potential of earning double-digit returns in this category, appetite from investors has been poor because of the deterioration in the financials of nonbanking finance companies and the happenings in the fixed income space over the past 15 months. Investors are sticking to high quality debt papers these days and prefer categories such as liquid and banking and PSU debt funds.

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After registering net outflows worth Rs 1.41 lakh crore in September 2019, liquid funds saw net inflows worth Rs 93,202 crore in October 2019. As per CARE Research, this is the highest net inflow into liquid funds reported since November 2018.

Arbitrage funds, which invest in a mix of shares and stock futures, continued to see inflows of Rs 2,644 crore as rich investors looking for cheaper valuations in equities preferred this category over debt funds. They have seen high inflows in the recent past as they enjoyed better taxation than debt funds.



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