Equity funds report second-highest inflows ever in June

Jason Monteiro 09 July 2015

A net inflow of Rs12,273 crore in June 2015 was the highest monthly inflow since January 2008, which recorded the highest ever

At a time when foreign investors have gone lukewarm in their Indian investments, Indian retail investors have turned extremely bullish and put in record amount in equity mutual fund schemes since the previous market high of January 2008. In June 2015, equity funds reported a net inflow of Rs12,273 crore. This is the highest inflow for a month since January 2008, when equity mutual funds reported a net inflow of Rs13,678 crore. Equity fund reported record sales in the month of June 2015 which touched Rs17,929 crore, the highest since July 2014. Redemptions increased to Rs5,656 crore in June 2015 from Rs3,943 crore in May 2015.

The strong inflows in mutual funds are in contrast to the outflow by foreign institutional investors. In the month of June itself, FIIs sold as much as Rs5,500 crore. Backed by the strong inflows from retail investors, mutual funds invested Rs10,325 crore in stocks.

Mutual fund investors usually buy high and sell low, getting carried away by investing when the market is hot. This was seen in the 2007-08 period when as much as Rs47,000 crore flowed in to equity mutual funds. This was a time when the markets were commanding an extremely high valuation. Though not as high as last time, this time too, the Nifty is trading at a high price-to-earnings of 23 times.

In the quarter ended June 2015, investors put in as much as Rs32,933 crore in equity schemes. This is the highest inflows ever for any three month period. The previous highest inflows was of Rs27,966 crore for the quarter ended March 2008. Over the past 12 months, investors have put in as much as Rs95,047 crore in equity schemes.

Interestingly, there were only two new fund offers in the month of June 2015, bringing in just 104 crore. Equity linked savings schemes brought in a net inflow Rs274 crore.

Equity schemes added as many as 308,972 accounts (or folios) in the month of June 2015, taking the total number of folios to 32.58 million. As many as 3.32 million folios were added in the past 12 months. In June 2015, assets of equity schemes grew by Rs7,147 crore to Rs3.72 lakh crore, backed by strong inflows.

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