The asset base of equity mutual funds surged 21 per cent to over Rs 7 lakh crore during the June 2020 quarter, primarily on account of rebound in markets and backed by strong SIP inflows, a Morningstar India report said on Thursday.
However, inflows during the quarter declined sharply to Rs 11,710 crore compared to Rs 30,703 crore in the January-March 2020 period, primarily due to increased redemptions in June as investors booked profits.
Of Rs 11,710 crore investment in the June 2020 quarter, the schemes attracted Rs 6,213 crore in April, Rs 5,256 crore in May and Rs 240.55 crore in June, which was the lowest investment level in four years.
“Tepid investor sentiment along with profit booking has led to a decline in net inflows since April,” the report noted.
It further said few top-performing funds continue to draw bulk of the inflows, particularly funds in the large-cap focused and multi-cap categories, while under-performing funds witnessed outflows.
The asset base of equity mutual funds rose 21.2 per cent to Rs 7.01 lakh crore by June-end from Rs 5.78 lakh crore at the end of March.
According to Morningstar, equity AUM rose as a result of rebound in markets, backed by strong monthly SIP (Systematic Investment Plan) flows, which averaged Rs 8,139 crore in the second quarter of the calendar year 2020.
Investors prefers SIP as it helps them in rupee cost averaging and also in investing in a disciplined manner without worrying about market volatility and timing the market.
The overall industry’s assets under management (AUM) rose 14.5 per cent to Rs 25.49 lakh crore in the quarter ended June from Rs 22.26 lakh crore at the end of March quarter.
The 45-player mutual fund industry witnessed over Rs 1.24 lakh crore inflow across the schemes in the June quarter.
Of the total inflow, banking and PSU funds witnessed an inflow of Rs 20,912 crore, while the same for corporate bond funds was Rs 18,738 crore as the flight to safer assets continued.
In addition, investors put in Rs 20,930 crore in arbitrage funds.