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MOSL: FUND FOLIO (July 2019)-Equity inflows hold steady in volatile times, hit seven-month high

FUND FOLIO (July 2019): Equity inflows hold steady in volatile times, hit seven-month high

 

Key observations

• June was a month of wild swings for the market. After the Nifty surpassed the 12,000 mark to hit a record high at the beginning of the month, the election outcome-driven euphoria fizzled out with investors waking up to the ground realities – slowdown in the economy, concerns around liquidity woes for NBFCs, and a moderation in consumption on the domestic front, among others. Throughout the month thereafter, the benchmark consolidated in the 11,500-12,000 range, in keeping with the volatile trend of the last two months.
• Even as the markets continued to seesaw, investors continued to park money in mutual funds, with inflows remaining steady and the contribution of systematic investment plans (SIPs) remaining stable at INR81.2b in Jun’19.
• Domestic MF industry’s average AUM increased for the second consecutive quarter in 1QFY20 (+4.2% QoQ) to touch a new high of INR25.6t. In Jun’19, average AUM increased by 9% YoY (INR2.1t), primarily on account of inflows in equity and ETFs.
• Inflows in equity schemes (including ELSS and arbitrage) increased from INR97b in the previous month to INR107b in June’19 – the highest since Nov’18 – led by a decline in redemptions (-21% MoM at INR142b), even as gross sales were down 10% MoM to INR250b.