Informist, Wednesday, Mar 9, 2022

By Ajay Ramanathan and Shreejit Nair 

MUMBAI – Net inflows into the mutual fund industry fell to 315.3 bln rupees in February from 352.5 bln rupees in January due to profit booking in most open-ended debt funds. 

Assets under management of the mutual fund industry fell 1.2% on month to 37.6 trln rupees as on Feb 28. The industry's overall assets have fallen on month for the first time since March 2021. 

Amid expectations of a likely hike in interest rates, open-ended debt funds saw net outflows of 82.7 bln rupees as investors booked profits in funds that are on the longer end of the yield curve. 

In this category, only liquid funds and overnight funds saw net inflows of 402.7 bln rupees and 12.96 bln rupees, respectively. 

The assets under management of open-ended debt funds fell 0.3% on month to 14.1 trln rupees as on Feb 28. 

Despite the volatility in the equity market in February, net inflows into open-ended equity funds rose to 197.1 bln rupees from 148.9 bln rupees in January. 

The Nifty 50 index and the Sensex fell 4% each in February as the conflict between Russia and Ukraine dented investor sentiment. 

"Despite volatility in the equity market, net inflows have increased, which is a positive," AMFI Chief Executive N.S. Venkatesh said. "Once the war stops, the crude oil prices will correct itself to below 100 rupees. In the next 2-3 months, I see the market rebounding."

All categories of open-ended equity funds saw net inflows in February. Among them, flexi-cap funds saw the highest net inflows of 38.7 bln rupees. Sectoral and thematic funds also saw net inflows at 34.4 bln rupees.  

The assets under management of open-ended equity funds fell 3% on month to 12.9 trln rupees as on Feb 28. 

Open-ended hybrid funds saw net inflows of 31.8 bln rupees. Apart from conservative hybrid funds and arbitrage funds, all open-ended hybrid funds saw net inflows. Balanced advantage funds saw the highest net inflows at 21.2 bln rupees. 

Conservative hybrid funds, and arbitrage funds saw net outflows of 509 mln rupees and 3.4 bln rupees, respectively.

Assets under management of open-ended hybrid funds fell 0.7% on month to 4.8 trln rupees as on Feb 28. 

'Other' exchange-traded funds saw net inflows of 107.9 bln rupees. Gold ETFs saw net outflows of 2.5 bln rupees due to likely profit booking by investors.

Index funds, and fund of funds investing overseas saw net inflows of 57.5 bln rupees and 2.3 bln rupees, respectively. 

"We cannot give a timeline on the hike in investment limits for overseas funds as our request for the same is pending with the Reserve Bank of India," Venkatesh said. 

For systematic investment plans, net inflows tapered to 114.4 bln rupees in February from 115.2 bln rupees in January.

Assets under management for systematic investment plans fell around 5% on month to 5.5 trln rupees as on Feb 28 due to mark-to-market valuation of investments.  End

Edited by Michael Correya

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