Inflows into equity mutual funds hit a 4-month low in April: AMFI

• Rise in valuations could have made investors stay away from fresh investments or take advantage of the rally, said Sriram BKR, senior investment strategist at Geojit Financial Services.
• Debt mutual funds saw overall net inflows of ₹1.06 lakh crore in April.
• Analysts believe that the interest in debt mutual funds is due to increased investor interest in fixed income products.

Inflows into the equity mutual funds hit a four-month low in April, as investors booked profits after a rally in March. As per data by Association of Mutual Funds in India (AMFI), inflows into MFs slumped 68% to ₹6,480 crore in April as compared to March when they were at ₹20,534 crore.

The last time the inflows were lower than April were in November 2022, when the flows stood at around ₹2,258 crore.

Benchmark index Sensex rallied nearly 4% in the month of April leading for investors to book profits.

“The dip in net flows could be attributed to a sharp drop in gross purchases month-on-month at -34% and a steady rise in redemptions at 9% month-on-month. The rise in valuations could have made investors stay away from fresh investments or take off some money to take advantage of the rally,” said Sriram BKR, senior investment strategist at Geojit Financial Services.

Inflows in the equity mutual funds during April were led by consistent flows in small and mid cap funds at ₹2,182 crore and ₹1,790 crore respectively. Some experts are optimistic that the net inflows would pick up in the next few months as April is relatively a quiet month.

"It is encouraging that the flows have remained positive in April. Historically, April is a relatively quiet month after the hectic activity in March. So not too much should be read into the net flows being lower compared to March. We are confident that the momentum will pick up in the coming months,” G Pradeepkumar, CEO at Union Asset Management Company said.

Investors prefer fixed income products over equity funds amid volatility
On the other hand, debt mutual funds saw overall net inflows of ₹1.06 lakh crore in April due to strong flows in liquid funds that received inflows of ₹63,219 crore, followed by money market funds at ₹13,960 crore. In March, debt MF saw outflows of ₹56,884 crore.

Analysts read the strong inflows in debt funds as increased investor interest in fixed income products than in equity funds that are facing volatility.

“Also, the data for April 2023 shows that investors preferred fixed income as a preferred choice of investment than equity oriented options,” added Sriram.

Further, in April, the contribution of retail investors through SIPs fell to ₹13,727 crore from ₹14,276 crore in March. In March SIP flows had hit an all-time high crossing the ₹14,000 crore mark after inflows of ₹13,686 crore in February and ₹13,856 crore in January.

Meanwhile, gold ETFs saw inflows of ₹124 crore in April as compared to outflows of ₹266 crore in March given gold prices have been rising. Other ETF categories saw inflows of ₹6,790 crore as this includes silver ETFs as well which has gained a huge traction after a jump in silver prices. In March, other ETFs categories saw outflows of ₹330 crore.


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