Retail investors slowed down the pace of their investments into mutual funds in the month of November, according to people aware of the development. Benchmark index NSE Nifty 50 has ended marginally in negative in the month of November after correcting 6.2% in the October.
Historically, retail inflows remain steady in the month of a market correction but tend to decline in the following month. This pattern was observed in October and November. This trend is also accompanied by lower redemption by retail investors as investors traditionally tend to wait for bounce back before proceeding ahead with redemption.
Retail investors' gross inflows in the month of October stood at Rs 74,727 crore, according to industry body Association of Mutual Funds of India. They redeemed an amount worth Rs 32,840 crore, resulting in net inflows of Rs 41,886 crore in the month of October. The gross inflows have seen a significant decline, said one of the officials aware of the development.
But on a net inflow basis, the figures may look not much different as redemptions have declined. The net inflows into mutual funds in November could be in the range of around Rs 30,000 crore, reverting to normal levels seen earlier. The mutual fund industry raised nearly Rs 6,078 crore through new fund offers in October.
In November, the industry has raised funds through 24 active and passive equity schemes. The total amount of fund raised via NFOs in November is not immediately available. Mutual funds were net buyers in the equity market in October to the tune of Rs 90,770.
97 crore, one of the largest net buys by the industry in months. They gross bought Rs 2.81 lakh crore and gross sold worth Rs 1.
90 lakh crore during October. In comparison, mutual funds have gross bought Rs 1.54 lakh crore and gross sold worth around Rs 1.
26 crore till Nov. 27, resulting in net flows into equities of Rs 28,213 crore. The decline in gross buys is also an indication of cautious approach in retail inflows.
The broad direction of retail flows remain intact, said the person cited above, adding that net SIP flows will be lower than October when it stood at Rs 25,322.7 crore. The month also saw decline in new folios in line with the trend seen subsequent to a corrective market and there has been slowdown in new investors coming into SIPs.
Flows continues to be highest into sectoral and thematic funds but some of the sectors that have seen corrections have seen dwindling inflows..
Business
Retail Flows Into Mutual Funds Slowed In November
Retail mutual fund inflows declined in November, with gross inflows falling from October levels, though net inflows remained steady due to reduced redemptions, according to AMFI data.