MFs see strong inflows despite negative market sentiment: BofA-ML

MUMBAI: Domestic mutual funds have continued to receive strong inflows from investors in the last 18 months with their ownership in Indian equities at an all-time high of 4.6 per cent despite some gloom in the markets, says a report.

Domestic MFs have seen 18 consecutive months of inflows worth $18 billion, according to the latest report by Bank of America Merill Lynch (BofA-ML).

"Backed by strong inflows, domestic MFs (mutual funds) have continued to increase their ownership of Indian equities to an all-time high level of 4.6 per cent (BSE500 Index) thus supporting the market," the report said.

"Despite negative sentiments, domestic MFs have continued to receive strong inflows from individual investors. They have seen 18 consecutive months (a first in last 15 years) of inflows worth USD 18 billion," it added.

As per the report, this trend is likely to continue "albeit at a slower pace at least over the near term on the expectations of economic recovery".

On the other hand, the report noted that India-dedicated foreign ETFs have started witnessing outflows in the past three months, "indicating tepid interest from foreign investors in India for the time being".

Besides, BofA-ML observed that foreign institutional investors (FIIs) ownership of Indian equities moderated for the second consecutive quarter this fiscal (July-September).

"FII investments have come down slightly from an all-time high level of 23.9 per cent of the market (BSE500 Index) to 23.3 per cent," it added.