{"id":155,"date":"2019-04-17T09:04:01","date_gmt":"2019-04-17T09:04:01","guid":{"rendered":"http:\/\/blog.certifiedfinancialguardian.com\/?p=155"},"modified":"2019-04-17T09:04:06","modified_gmt":"2019-04-17T09:04:06","slug":"what-led-to-gush-of-inflows-in-equity-mutual-funds-in-march-2019","status":"publish","type":"post","link":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/2019\/04\/17\/what-led-to-gush-of-inflows-in-equity-mutual-funds-in-march-2019\/","title":{"rendered":"What Led To Gush Of Inflows In Equity Mutual Funds In March 2019"},"content":{"rendered":"\n

The mutual fund industry witnessed an average addition of 9.13 lakh SIP<\/a> accounts every month in FY 2018-19.<\/p>\n\n\n\n

A remarkable achievement for the mutual fund<\/a> industry isn\u2019t it?<\/p>\n\n\n\n

According to A<\/a>MFI<\/a>, inflows through SIPs jumped 38% from Rs 67, 190 crore in FY 2017-18 to Rs 92,693 crore in FY 2018-19. <\/p>\n\n\n\n

Encouraging\nSIP inflows<\/strong><\/p>\n\n\n\n
\n Month<\/strong>\n <\/td>\n SIP inflows (Rs in crore)<\/strong>\n <\/td><\/tr>
\n April-18\n <\/td>\n 6,690\n <\/td><\/tr>
\n May-18\n <\/td>\n 7,304\n <\/td><\/tr>
\n June-18\n <\/td>\n 7,554\n <\/td><\/tr>
\n July-18\n <\/td>\n 7,554\n <\/td><\/tr>
\n August-18\n <\/td>\n 7,658\n <\/td><\/tr>
\n September-18\n <\/td>\n 7,727\n <\/td><\/tr>
\n October-18\n <\/td>\n 7,985\n <\/td><\/tr>
\n November-18\n <\/td>\n 7,985\n <\/td><\/tr>
\n December-18\n <\/td>\n 8,022\n <\/td><\/tr>
\n January-19\n <\/td>\n 8,064\n <\/td><\/tr>
\n February-19\n <\/td>\n 8,095\n <\/td><\/tr>
\n March-19\n <\/td>\n 8,055\n <\/td><\/tr><\/tbody><\/table>\n\n\n\n

Data as on March 31, 2019<\/p>\n\n\n\n

(Source: AMFI)<\/p>\n\n\n\n

As on March 31, 2019, there were 2.62\ncrore active mutual fund SIP accounts. But surprisingly, AUM collected through\nSIPs dipped in the last month of FY 2018-19.<\/p>\n\n\n\n

The first time inflows through SIPs\nrecorded a month-on-month fall was in March FY 2018-19. <\/p>\n\n\n\n

It\u2019s possible that some investors stopped\ninvesting in their SIPs. <\/p>\n\n\n\n

But surprisingly, the net inflows in the equity and ELSS<\/a> categories for March 2019 have been much stronger than they were a month ago. <\/p>\n\n\n\n

As compared to net inflows of Rs 3,948\ncrore in the equity category during February 2019, the inflows for March 2019\nwere strong at Rs 9,014 crore. ELSS category witnessed inflows of Rs 2,742\ncrore in March versus Rs 1,174 crore in February. <\/p>\n\n\n\n

Have investors made more lump sum\ninvestments in March 2019?<\/p>\n\n\n\n

Possibly, yes. <\/p>\n\n\n\n

As you know, markets have rallied\nfiercely in the past two months. This pre-election rally seems to have caught\nattention of many investors. <\/p>\n\n\n\n

But you would be surprised to know,\ndespite higher inflows through SIPs in FY 2018-19 and heavy inflows through the\nlump sum route in March 2019, the net annual inflows for FY 2018-19 were 30% lower\nthan a year ago. <\/p>\n\n\n\n

In FY 2017-18, equity mutual funds\nreceived net inflows of Rs 1,36,238 crore. While in FY 2018-19, they reduced to\nRs 95,199 crore even after considering a massive jump in the SIP collections of\nthe mutual fund industry. <\/p>\n\n\n\n

The picture for equity-oriented hybrid\nfunds looks grimmer. Against Rs 89,757 crore in FY 2017-18, the net inflows\ndwindled to Rs 6,865 crore in FY 2018-19. <\/p>\n\n\n\n

Note: We have combined inflows of equity and\narbitrage funds for more appropriate comparison. Until FY 2017-18 AMFI didn\u2019t\nprovide separate figures for equity and arbitrage categories. <\/p>\n\n\n\n

What\ndoes this indicate?<\/strong><\/p>\n\n\n\n

Although SIP investors have grown in\nnumbers, perhaps many investors who had opened new SIPs after 2014 might have\ndiscontinued their SIPs abruptly. <\/p>\n\n\n\n

Heavy inflows in March 2019 through\nthe lump sum route suggest that investors are speculating on the election\noutcome. <\/p>\n\n\n\n

The calendar year 2018 was a harsh one\nfor equity mutual fund investors. A significant fall in the AUM during FY\n2018-19 suggests that investors still aren\u2019t prepared to withstand a sustained\ndownturn in the market. <\/p>\n\n\n\n

And\nhere\u2019s the danger\u2026<\/strong><\/p>\n\n\n\n

Unless investors are educated enough,\nnot only will they continue to speculate, but are likely to lose patience (and\nclose their SIPs) just when the market tide is about to turn in their favour. After\nall, a sustained lull in the markets can actually help them accumulate more\nunits, right? <\/p>\n\n\n\n

Cessation of upfront commissions has\nadversely affected the business of many mutual fund distributors. Many of them\nhave either stopped or have started going slow on garnering fresh business.\nThis has affected the AUM of the mutual fund industry. <\/p>\n\n\n\n

On the other hand, investors losing\nfaith in the market and exiting, or getting enthused because of a sharp rally\nand going gaga over mutual fund investing are equally bad situations, for them\nas well as for mutual fund distributors. <\/p>\n\n\n\n

As remains the question of\npre-election rally, it seems to be a liquidity-driven, with hardly any change\nin the macroeconomic indicators. Mutual fund advisors should warn investors\nagainst the adverse effects of speculation. As it seems now, markets are\npossibly factoring in NDA\u2019s victory. Any different election outcome might drag\nmarkets. <\/p>\n\n\n\n

How would investors react in that\ncase, especially those doing lump sum investments now?<\/p>\n\n\n\n

So\nwhat\u2019s the way out?<\/strong><\/p>\n\n\n\n

Both investors and mutual fund\ndistributors need to focus on long term. If investors ignore short term\nvolatility and invest through SIPs for their long term goals, they are likely\nto benefit immensely. <\/p>\n\n\n\n

Similarly, if mutual fund distributors\nare prepared to make more effort and replace their business models from\ncollecting commissions upfront to earning higher trail commissions, they would\nbenefit as well. <\/p>\n\n\n\n

Investors need to understand the\nimportance of asset allocation and mutual fund advisers must play an active role\nin educating them. <\/p>\n\n\n\n

The Indian mutual fund industry would see\nfurther development only if investors and distributors of mutual funds demonstrate\nmore maturity. <\/p>\n","protected":false},"excerpt":{"rendered":"

The mutual fund industry witnessed an average addition of 9.13 lakh SIP accounts every month in FY 2018-19. A remarkable achievement for the mutual fund industry isn\u2019t it? According to AMFI, inflows through SIPs jumped 38% from Rs 67, 190 crore in FY 2017-18 to Rs 92,693 crore in FY 2018-19. Encouraging SIP inflows Month…<\/p>\n","protected":false},"author":3,"featured_media":158,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"cybocfi_hide_featured_image":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/155"}],"collection":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/comments?post=155"}],"version-history":[{"count":1,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/155\/revisions"}],"predecessor-version":[{"id":157,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/155\/revisions\/157"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media\/158"}],"wp:attachment":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media?parent=155"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/categories?post=155"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/tags?post=155"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}