Inflows in equity funds stay ahead of redemption pressure in March as investors flock to NFOs

The gross buy-to-sell ratio of the equity mutual funds has touched a record 2.6 in March 2022, compared with the long-term average of 1.4, according to the data from the Association of Mutual Funds in India (AMFI). A higher ratio reflects the rising allocation to equities by investors. It was driven by incremental new fund offerings (NFO) worth Rs 8,170 crore that pushed gross inflow to a record Rs 46,407 crore in March 2022.

The current reading of the ratio suggests that on average nearly three rupees are invested in the equity funds for every rupee of redemption which implies a net inflow into these funds. Gross inflow was largely into multi-cap funds, which attracted a gross infusion of Rs 10,196 crore in March following the NFO of the SBI Multicap Fund. This lifted the gross buy-to-sale ratio of multi-cap funds to 20. The ratio for large cap and midcap funds and ELSS was 3.8 and 2.9 respectively.

The gross redemption from equity mutual funds was Rs 17,944 crore in March, 10% lower than its one-year average. Assets under management (AUM) of equity schemes rose by 39% year-on-year to Rs 13.7 lakh crore. Within equity, the highest AUM expansion of 176% was in multi-cap funds to Rs 54,932 crore.