Equity funds spring back to life as debt do them part
After having conceded the battle last month to debt funds, equity funds are staging a strong comeback this month.
By Gaurav Pai and N Sundaresha Subramanian, TNN |
MUMBAI: After having conceded the battle last month to debt funds, equity funds are staging a strong comeback this month. Mutual fund officials said the recovery in the stock market since the last week of July will translate into more inflows into equity funds this month.
Sethuram Iyer, CIO, SBIMF agrees. He says: “Although, the abundant liquidity last month, which resulted in high inflows into debt funds remains unchanged — equity funds have also picked up. Money inflows into equity funds have been strong so far in the month.” The sensex and the nifty have added 6% from August 1, while the BSE Mid Cap Index has added more than 11% in the same period.
At the same time fund flows into debt schemes, too, are expected to remain robust.
Inflows into debt funds saw a substantial increase in the month of July in comparison with the previous month as investor interest in fixed income products was spurred by two successive interest rate hikes and an easing of liquidity in the system. According to Amfi, income funds saw net inflows of Rs 5,114 crore in July this year. In comparison, these funds had negative inflows of Rs 2,110 crore in June. Interestingly, July has seen outflows from growth funds (purely equity) to the tune of Rs 209 crore
Equities have been volatile since peaking out in mid-May prompting many investors to pull their investments out of growth funds.
The general perception is that volatility in equity markets prompt switching of assets from equity to debt. Mutual fund officials, however, say that is true only to very small extent. Sandeep Bagla, head, fixed income, Principal PNB Asset Management, says: “In India, there is a clear demarcation between equity and debt funds, as far as the institutional investors are concerned. Most of the inflows in July would be from institutional investors; hence it would not be right to ascribe flows into debt funds, to uncertainty in equity markets.”
Liquid and money market funds also saw a net inflow of Rs 15,517 crore in July (Ouflows of Rs 1,023 crore in June). Mr Bagla feels that there may not be any slowdown in the funds entering into the liquid and income funds.
According to him, “Liquidity has been rather comfortable, leading to inflows into such mutual fund schemes. The trend could strengthen in coming weeks as liquidity is expected to remain easy.”
Sethuram Iyer, CIO, SBIMF agrees. He says: “Although, the abundant liquidity last month, which resulted in high inflows into debt funds remains unchanged — equity funds have also picked up. Money inflows into equity funds have been strong so far in the month.” The sensex and the nifty have added 6% from August 1, while the BSE Mid Cap Index has added more than 11% in the same period.
At the same time fund flows into debt schemes, too, are expected to remain robust.
Inflows into debt funds saw a substantial increase in the month of July in comparison with the previous month as investor interest in fixed income products was spurred by two successive interest rate hikes and an easing of liquidity in the system. According to Amfi, income funds saw net inflows of Rs 5,114 crore in July this year. In comparison, these funds had negative inflows of Rs 2,110 crore in June. Interestingly, July has seen outflows from growth funds (purely equity) to the tune of Rs 209 crore
Equities have been volatile since peaking out in mid-May prompting many investors to pull their investments out of growth funds.
The general perception is that volatility in equity markets prompt switching of assets from equity to debt. Mutual fund officials, however, say that is true only to very small extent. Sandeep Bagla, head, fixed income, Principal PNB Asset Management, says: “In India, there is a clear demarcation between equity and debt funds, as far as the institutional investors are concerned. Most of the inflows in July would be from institutional investors; hence it would not be right to ascribe flows into debt funds, to uncertainty in equity markets.”
ADVERTISEMENT
Liquid and money market funds also saw a net inflow of Rs 15,517 crore in July (Ouflows of Rs 1,023 crore in June). Mr Bagla feels that there may not be any slowdown in the funds entering into the liquid and income funds.
According to him, “Liquidity has been rather comfortable, leading to inflows into such mutual fund schemes. The trend could strengthen in coming weeks as liquidity is expected to remain easy.”
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
