Equity mutual fund (MF) schemes recorded their worst in June in over four years
Equity mutual fund (MF) schemes saw net inflows of just Rs 240 crore in June. It recorded its worst month in over four years, even as the markets clocked gains of over 7 per cent during the month. But gold exchange-traded funds garnered flows of Rs 494 crore which is more than equity schemes in June. This may be the result of redemptions by institutional investors and individual investors amid economic disruptions caused by the Covid-19 pandemic.
According to Swarup Mohanty, chief executive officer at Mirae Asset Management Company (AMC) “Redemptions from institutional investors and sizeable outflows from large- and multi-cap funds have skewed the data. There has also been a flight to safety among individual investors with the markets showing a rebound after a sharp correction,”
June was the worst month for equity flows since March 2016. During 2016 equity schemes last saw negative net flows (Rs 1,370 crore). Compared to the last 12-month average of Rs 7,103 crore, the June flows were down 96 per cent. Flows were 95 per cent lower than the previous months.
Systematic investment plans (SIPs), saw a dip of another 2.4 per cent (Rs 196 crore) in June on a month-on-month basis. The SIP book is now down 8 per cent from March peak of Rs 8,641 crore. The contribution through systematic investment plans or SIPs also remained on a downward trajectory due to market volatility. A systematic investment plan is an investment facility offered by many mutual funds to investors, allowing them to invest small amounts periodically instead of lump sums. The frequency of investment is usually weekly, monthly or quarterly.
There has also been an increased interest indirectly investing in stocks in recent months. Because there is a spike in the number of demand accounts opened at several broking houses.