With a net inflow of Rs 5,988.17 crore in June 2021, equity-oriented mutual funds witnessed net inflows for the fourth consecutive month. While it is lower than the net inflow of Rs 10,082. 98 crore witnessed in May; it is still a sizeable amount nonetheless in absolute terms. It should be noted that prior to March 2021, the segment witnessed net outflows for 8 continuous months.
“With net inflows in March, April, May and now in June, clearly investors are gaining their conviction back on the equity markets. However, the lower quantum of net inflow compared to May could also be attributed to profit booking by investors with equity markets witnessing a sharp rally in recent times. This is evident from the high redemption amount in June compared to May. But at the same time, the amount mobilised was also higher in June than May, signifying that investors are willing to invest more in the equity markets now,” said Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, commenting on equity-oriented funds, based on AMFI’s monthly data for June 2021.
Significant improvement on the coronavirus situation in the country, along with improving recovery rate, and pick-up in vaccination drive have provided comfort to investors. Good quarterly results and positive earnings growth outlook over the long term have alleviated concerns of any severe impact of the second wave of pandemic on the economy. Additionally, a surge in the markets despite challenges also boosted investor sentiment. These factors have prompted them to again allocate assets towards equities.
“Except for the ELSS category and Value/Contra Fund category, all the equity-oriented categories witnessed net inflows in June. Riding on the recent market rally, the Mid Cap Fund category attracted significant investments to emerge as the biggest beneficiary during the month as it received net inflow of Rs 1,729.07 crore,” informed Srivastava.
Sector/Thematic funds also continue to receive enhanced traction from investors as some of them continue to deliver noteworthy performance in recent times. Flexi Cap Funds, with their fluid investment approach that enables them to benefit from investment opportunities across market segments, also attracted significant investments from investors.
Akhil Chaturvedi, Associate Director, Head of Sales & Distribution, Motilal Oswal Asset Management Company, said, “Investors continue to invest in pure equity schemes, resulting in positive net sales of almost Rs 6000 crore. This is slightly lower than last month due to higher redemptions. For now, the trend surely is in favour of Indian equities by domestic investors. It is particularly very encouraging to witness a good amount of interest in dynamic / asset allocations funds with higher gross sales of Rs 4300 cr and net sales of Rs 2300 cr.”
The prime objective of the funds in this category is to use valuation models and then dynamically rebalance portfolio between equities and fixed income, ensuring better risk-adjusted returns for investors. “In the current environment, dynamic / asset allocations funds are a good option for investors,” he added.