Equity mutual funds log Rs 10,585 cr inflow in July; total investment crosses Rs 43k cr so far this fiscal

Investors pumped a staggering Rs 10,585 crore in equity mutual funds in July, mainly driven by strong corporate earnings and near normal monsoon.

With this, total inflow has reached to over Rs 43,300 crore in equities during the current financial year (April-July), according to the data from the Association of Mutual Funds in India (Amfi).

Strong inflow pushed the asset base of equity mutual funds (MFs) by more than 10 per cent to Rs 8.3 lakh crore by July-end from Rs 7.5 lakh crore at end-March.

According to Amfi data, equity and equity-linked saving schemes saw an inflow of Rs 12,409 crore in April, Rs 12,070 crore in May, Rs 8,237 crore in June and Rs 10,585 crore in July.

"Strong earnings season and near normal monsoon have buoyed the sentiments in near term. However, in last few years we are seeing that the average Indian investors are now far more financially literate and mature. They realise that India is a strong structural story and participating for the long term as reflected by the growing SIP book.

"Also, the fact that no other asset class is showing the prospects of double digit returns over the long term is pushing many investors to increase the share of equity funds in their asset allocations," said Sumit Bhatnagar, head of equity funds at Indiabulls Asset Management Company.

Harsh Jain COO at Groww.In is of the view that growth in equity mutual funds inflows is mainly due to the bull run in large cap and a promising economic outlook.

"Investors are becoming more mature and investing through SIP (Systematic Investment Plan), which immunes them to short-term volatility. Additionally, a lot of investors who were earlier reluctant to invest through mutual funds, have diverted their direct equities into mutual funds. I see this trend continuing for next 3-5 years," he said.

Viral Berawala, CIO at Essel Mutual Fund, said that increase in assets under management (AUM) in July is a function of both the inflows as well as increase in prices of the underlying stocks.
Overall, the mutual fund industry saw a pull out of funds to the tune of over Rs 32,000 crore last month.

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Liquid or money market segment -- with investments in cash assets such as treasury bills, certificates of deposit and commercial paper for shorter horizon -- witnessed an outflow of over Rs 31,000 crore.
Besides, income funds, which invest in a combination of government securities, saw a pullout of Rs 7,950 crore and gold exchange traded fund too witnessed an outflow of Rs 50 crore.

At present, the mutual fund industry, comprising 42 players, manages assets to the tune of Rs 23 lakh crore.