Nothing would make Indian mutual fund players happier than investors returning to their equity schemes. This turned out to be a reality in May, as retail investors pumped Rs 506 crore in fresh investments in equity categories, after four months.
For the first time this year, equity segments saw positive flows during a month when the key benchmark indices lost over six per cent, amid weak global economic scenario. Fund managers are pleasantly surprised at this development.
The chief marketing officer of a large-sized fund house said, "It's contrary to our expectations. We had noticed a positive momentum was building up, but had not expected inflows to cross Rs 500 crore. I believe, market corrections propelled investors to get into opportunistic buying, which is good from a long-term perspective."
|CHANGE OF FORTUNES |
Net inflows in equity mutual funds so far in 2012
|Month ||Net inflow/outflow |
|January ||-456 |
|February ||-2,680 |
|March ||-196 |
|April ||-455 |
|May ||506 |
|All figures in Rs crore |
Source : Association of Mutual Funds in India
At a time when the industry had been losing its equity folios and none of the schemes could earn investors positive returns, "positive inflows is quite encouraging," he added.
Prior to this, the industry had mopped up Rs 360 crore of fresh money into equities in December last year. What followed, gave shocks to fund managers. Around Rs 3,800 crore went out of the system from diversified equity schemes during the January-April period.
Dhirendra Kumar, chief executive officer of Delhi-based fund-tracking firm, Value Research, said, "Indian mutual fund investors have become quite mature. They pump in money when markets substantially correct. In such a scenario, investors need enough confidence to participate in markets on a regular basis. If strong sentiments continue for another few months, I believe mutual fund investors will come back to the markets."
Interestingly, gold exchange-traded-funds (ETFs) saw net outflow of Rs 41 crore while investors continued to pull money out of equity-linked saving schemes (ELSS), which stood at Rs 81 crore in May. Barring these two fund categories, all other segments saw positive flows during the month.
Assets under management as on 31 May stood at Rs 6,99,284 crore.