Retail Mutual Funds investors turn cautious in August

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Focussed and flexi cap funds found favour with investors, with maximum inflows going into these categories. In contrast, investors pulled out Rs 613 crore out of Value/Contra funds, Rs 778 crore out of ELSS funds and Rs 162 crore out of Smallcap funds in August.

Retail investors turned cautious in August and continued to book profits, as stocks hit new highs. Even though the net inflows into equity-oriented schemes in August held up at Rs 8,666.68 crore, according to data released by the Association of Mutual Funds in India (Amfi), they were 61.6% lower than July’s inflows of Rs 22,583.52 crore. Redemptions during August remained elevated at Rs 25,002 crore, as retail investors continued to pull money out from select equity schemes.

According to NS Venkatesh, chief executive officer of Amfi, the robust monthly mobilisation in arbitrage, dynamic asset allocation, thematic/sectoral and diversified flexicap schemes has overshadowed profit-booking during the last few months.

Focussed and flexi cap funds found favour with investors, with maximum inflows going into these categories. In contrast, investors pulled out Rs 613 crore out of Value/Contra funds, Rs 778 crore out of ELSS funds and Rs 162 crore out of Smallcap funds in August.

Industry experts believe that while existing investors are switching from pure equity schemes to less risky categories, new investors are entering the market with hybrid funds. Fund houses continued to launch new fund offers in the balanced advantage category during the month, which helped garner flows.

Gautam Kalia, head – Investment Solutions, Sharekhan by BNP Paribas, said, “The rally in the markets has attracted many conservative investors to also enter the market, which is the reason for the consistent growth in the hybrid funds category since the beginning of this year. Dynamic asset allocation funds witnessed the maximum inflow this month.”

While flows may have ebbed compared to July, there’s no denying that the pandemic has whetted the retail investor’s appetite for equities. Data shows that retail investors now account for 46.87% of the industry’s total assets under management of Rs 36.59 lakh crore. Since April 2021, 53 lakh new systematic investment plan accounts have been added, taking the total SIP accounts to 4.32 crore. New SIPs registered in August came in at 25 lakh, which is the highest ever monthly registration. SIP AUMs now stand at Rs 5.26 lakh crore, which is a third of retail AUMs.

The industry’s overall assets under management crossed the Rs 36-lakh-crore mark for the first time in August, driven by the flows from retail investors. Corporate flows into debt schemes remained anaemic at Rs 1,074 crore. Liquid and overnight funds saw outflows during the month.

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