December 11, 2022
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Equity MF inflows in November to 21-month low
Net investments in active equity mutual fund (MF) schemes plunged to Rs 2,260 crore in November, even as SIP inflows rose to an all-time-high of Rs 13,300 crore, shows the latest data from the Association of Mutual Funds in India. The net inflows are lowest since February 2021. On the other hand, the NSE Nifty 50 had logged monthly gains of 4.14 per cent in November.
The net inflows were dragged down by a surge of redemptions. In November, investors pulled out Rs 26,030 crore from active equity schemes, 60 per cent more than the previous month and the highest since September 2021.
According to Amfi, outflows swelled as investors booked profits. The outflows may have stemmed from redemptions by HNIs and profit-booking in largecap and flexicap funds on the back of good performances by these categories in recent months. HNIs may have pulled out money as they are known to read too much into valuations and other market data.
Net inflows in the top two equity schemes — flexicap and largecap — turned negative in November. While investors pulled out Rs 1,040 crore net from largecap schemes, flexicap funds suffered an outflow of Rs 860 crore.
In a recent report, ICICI Direct pointed out that there have been at least three instances in the past 4-5 years when investors increased their equity MF investments when the market was on a downslide.
The study showed that average monthly inflows into active equity schemes rose almost 5x between November 2021 and June 2022 (when the market was declining from the all-time-high achieved in October 2021) as compared to the preceding months. In another instance (August to October 2022), when the market was on the rise, average monthly inflows declined to Rs 5,900 crore from Rs 15,500 crore during the November 2021-June 2022 phase.