Thu. Mar 28th, 2024
mutual funds

 

On Monday, BSE Sensex, the benchmark index went up to an all-time high after positive cues as US election results triggered risk appetite globally. Up 524 points, Sensex was marked at 42,417.35. On the other hand, at the opening session, Nifty was at 12,427. Last week was a remarkable time for the equity markets. The BSE Sensex has gained 7 percent since the beginning of the last week. 234 out of 298 equity mutual fund schemes are giving positive returns in the last one year. The highest return is being 53 percent up in a small-cap fund.

Equity mutual funds have got an outflow of over ₹ 7,200 crores. During the September quarter, there has also been a drop in the inflow from the systematic investment plan (SIP) folios. The largest equity mutual funds have failed to deliver in the last one year. Now, the biggest schemes are mostly large-cap and multi-cap schemes.

The schemes that have shined are mostly very small schemes in terms of the assets under management (AUM). Most of these schemes belong to the mid and small-cap categories.

Quant Small Cap Fund, marked at the top among the equity schemes in the one-year performance and achieved 53 percent return and also managed assets worth ₹ 49 crores. BOI AXA Small Cap Fund also went up by 35 percent just in one year and now holds an AUM of ₹ 80 crores.

90 percent of the actively-managed equity mutual fund schemes in terms of highest returns fall under the ₹500 crore AUM segment. There are some exceptions, with some big schemes which hold AUM of over ₹ 1,000 crores. Some of them are Parag Parikh Long Term Equity Fund, DSP Small Cap Fund, Kotak Small Cap Fund, UTI Mid Cap Fund, and UTI Equity Fund.

Before this, the last time Sensex achieved such a high of 42,274 was in the pre-covid period at the start of the year on January 20. Currently, the index is hovering around 42,308.

Equity mutual funds witness outflow for the fourth straight month:

According to data by the Association of Mutual Funds in India Equity and equity-linked mutual fund schemes witnessed a net outflow of ₹ 2,724.95 crores in October. They witnessed an outflow of ₹ 734 crores in September.

Net investment in equity funds has been found to go down for the last few months. This was the effect of fears of the impact of the Covid-19 pandemic on businesses and later as investors booked profits when equity markets soared.

Amol Joshi, founder of Planrupee Investment Services said to BloombergQuint, “The outflows in equity schemes in October can be attributed to a number of factors. First, there has been a considerable rise in equity markets, and people that had seen the massive fall in March and had entered at that time would have taken some money off the table.”

He added, “Second, there is a fear of the second wave of Covid-19 cases, both because of the festive season here in India and because of reports of a rise in cases in Europe and the U.S. And finally, there was quite a bit of volatility in global markets on account of the U.S. presidential elections at the start of November. A few investors have decided to take money out of equity markets in the run-up to the elections because they are risk-averse.”

The news agency also reported comments of Raghav Iyengar, the chief business officer at Axis AMC, who opined that the net outflow in equity schemes is not a cause for too much worry. He said, “Behaviourally, it is natural to see redemptions when the equity market has bounced back so quickly from the sharp fall in March. What is giving me confidence is the gross inflows into equity mutual fund schemes, both in terms of value and volume. My only caveat is that the sectoral and thematic category bears watching. Retail investors must approach it with caution.”

All the major equity-oriented mutual funds saw a net outflow in October. The biggest outflow was seen in Multi Caps. This was as AMFI started releasing granular data in April 2019. This was the fifth straight month in which these schemes saw an outflow. Outflow was also seen in Large Cap funds for the fifth straight month.

The outflow, however, remained moderated for hybrid schemes at ₹ 1,682 crores in October compared to ₹ 4,219 in September and ₹ 4,819 crores in August 2020.

Akhil Chaturvedi-Associate Director and Head of Sales and Distribution, Motilal Oswal Asset Management said to business standard, “What is surprising is that hybrid/asset allocation funds which are conservatively managed are also witnessing very high redemptions. This trend is not understandable as broadly, these funds are apt to ride through volatile times and best suited for investment in these times of uncertainty.”

Total mutual fund assets under management as of October 31 went up to the highest ever of ₹ 28.2 trillion.

 

By Swastik Bhattacharjee

A student from Kolkata. Currently content creator at The Indian Wire.