War & Caution: Retail investors temper equity MF buys in April

Mumbai: Retail investors slowed equity mutual fund purchases amid uncertainty on oil prices and its impact on the Indian economy, adding ₹38,440 crore to this asset category.

In March, they had committed ₹40,450 crore to equity funds, as per data from industry body AMFI.

Higher returns from international markets like the US, South Korea, Taiwan and China saw investors pour in ₹1,660 crore into the fund of funds investing overseas, compared with ₹531 crore in March. To be sure, the investment base in this category is small.


Collections through SIPs fell to ₹31,115 crore in April, compared with ₹32,807 crore in the previous month. SIP stoppage ratio was the same as in the previous month - at 101%. Aboout 5.13 million SIPs saw tenure completion or discontinuation compared with 5.07 million new starts.

Due to inflows in debt funds and a rise in equity markets, overall assets under management rose 11.49% to ₹81.92 lakh crore higher than ₹73.48 lakh crore in the previous month.

"Investors waiting on the sidelines added money while those who are losing money are waiting for a rise, resulting in higher net equity sales," said Madhu Nair, CEO, Union Mutual Fund.

Within the equity space, investors continued to prefer flexi cap funds, allocating the highest amount of ₹10,148 crore slightly higher than ₹10,052 crore in March. Small and midcaps continued to attract investor attention seeing flows of ₹6,886 crore and ₹6,551 crore, higher than the previous months ₹6,253 crore and ₹6,064 crore, respectively.

The large and midcap category saw lower inflows of ₹4,490 crore compared with ₹5,307 crore in the previous month while multi cap funds saw collections worth ₹3,806 crore against ₹2,982 crore in the previous month. With the market coming back from a bad month in March, investors were cautious in sectoral and thematic funds and allocated a lower amount of ₹1,949 crore compared with ₹2,699 crore in the previous month.

With April being the first month of the financial year, corporates with surplus liquidity added money to liquid, overnight and money market funds. Liquid funds saw inflows of ₹1.65 lakh crore, while overnight and money market categories saw additions of ₹31,420 crore and ₹20,642 crore, respectively.

"Possibility of increasing yields in the short term due to spike in inflation has led to some flows in liquid, overnight funds," says Juzer Gabajiwala, director, Ventura Securities.

Within the hybrid category, arbitrage funds which score on tax efficiency compared to liquid funds, saw inflows of ₹12,378 crore compared with outflows of ₹21,114 crore in the previous month. Multi asset funds which work as a one-stop solution for investors looking to invest in a mix of equity, debt and gold with tax efficiency saw marginally lower inflows of ₹5,113 crore compared with ₹5,213 crore in the previous month.