Data from the Association of Mutual Funds of India (AMFI) showed monthly flows into products through systematic investment plans (SIPs) also dipped to ₹13,728 crore compared to ₹14,276 crore in March. The Sensex and Nifty rose roughly 3.59% and 4.06% in April.
Buoyed by a rising market and higher inflows into debt schemes, total assets under management of the mutual fund industry rose to ₹41.52 lakh crore in April from ₹40.04 lakh crore in March.
“The rise in valuations could have made investors stay away from fresh investments or take off some money to take advantage of the rally,” says Sriram BKR, senior investment strategist at Geojit Financial Services.
Since March witnessed good inflows in equity, investors probably took a wait-and-watch approach to allocate additional investments to equity in April while continuing with their existing SIPs, said Manish Mehta, national sales head, Kotak Mutual Fund.
Within equity mutual funds, bulk of the flows came into mid- and small-cap funds. Small-cap schemes saw inflows of ₹2,182 crore, investors put ₹1,791 crore in midcaps. Flows into large-cap funds were muted at ₹63 crore.
Higher returns from short-term instruments like treasury bills and the start of the new financial year saw corporates putting money into liquid funds, money market funds and ultra-short-term funds. These categories received inflows of ₹88,000 crore out of the ₹1,06,000 net flows into the fixed income schemes.”After meeting the tax liabilities of the last financial year in March, corporates would have parked their excess investible money in liquid fund and ultra short duration fund categories, for a short period, thereby leading to huge inflows in these categories,” says Himanshu Srivastava, associate director – manager research at Morningstar India.
The index funds category, which includes both passive equity and debt funds, saw inflows of ₹147 crore. With long-term capital gains tax and indexation benefits for debt mutual funds ending on March 31, rich investors found little incentive to lock money into high-yield passive target maturity funds.
In the hybrid segment, investors allocated ₹4,192 crore to arbitrage funds, anticipating higher spread between cash and futures market.
“Arbitrage is the new debt, due to its tax efficiency and is likely to attract flows from rich investors,” says Anand Vardarajan, business head, Tata Mutual Fund.
