Overall asset under management (AUM) of the mutual fund industry touched it’s all time high in November coming in 2.7% higher than the previous month at INR 27.04 lakh crore. From a base of INR 10.9 lakh crore in November 2014, the industry AUM has grown at about 20% CAGR in last five years to cross INR 27 lakh crore now. However, net inflows into open ended mutual funds fell in November owing to introduction of exit load in liquid funds and profit booking by investors in equity funds. Broad categories like equity, debt and index funds & ETFs witnessed inflows during the month, while hybrid funds witnessed outflows. Profit booking in open ended equity funds continued in the month of November leading to sluggish inflows post several months of robust inflows.
Large cap funds witnessed marginally higher inflows in November compared to the previous month due to the continued narrow rally in the equity markets. However, other sub categories among open-ended equity categories like multi cap, mid cap, small cap and ELSS funds witnessed dip in inflows amid profit booking by investors and overvalued equity market. Experts attribute this dip to the underperformance of funds relative to the major benchmark indices like Nifty and Sensex. SIP AUM touched an all-time high of INR 3.12 lakh crore in November, as SIP inflows grew 0.33% month on month to INR 8,272 crore.
“Since the market is touching new highs, people are booking profits and taking money out. Now they are waiting in the wings for fresh lows to happen so that they can re-enter. The budget expectations will start building up from January onwards. I think the market should keep looking up. So, if somebody wants to invest, I think they should make investments at this juncture itself.” said AMFI CEO.
Inflows into passive funds dropped in November in comparison to the previous month owing to lack of any NFOs during the month. Equity ETFs witnessed high inflows at INR 2,954 crore as major benchmark indices continues to outperform majority of active funds amid narrow market rally.
Open ended hybrid schemes witnessed outflows in November owing to redemptions from aggressive hybrid, conservative hybrid and equity savings sub categories. Arbitrage funds garnered INR 5,354 crore in November as investor’s prioritized safety over volatility.
With the introduction of staggered exit load in liquid funds, overall inflows into open ended debt category dropped to INR 51,428 crore in November. Inflows into overnight funds at INR 20,649 crore witnessed massive growth as institutional investors moved money from liquid funds due to introduction of tighter norms by SEBI. Banking and PSU debt category which invests in safer banks and PSU bonds witnessed almost 50% rise in inflows to INR 7,231 crore in November. Inflows were primarily into safer fund categories with low credit risk like liquid, money market, short duration, corporate bond, low duration and ultra short duration. Credit risk and medium duration categories continued to witness outflows as credit fears continue in debt markets.
It is not advisable to take investment decisions based on inflows/outflows as these can be volatile. Your investment decisions should be based on your investment objective, investment horizon and risk profile. Consider investing for long term through SIP as it ensures rupee cost averaging.
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