SIPs steady, lumpsum equity flows slow down in September

AUM of mutual funds fell to Rs 24.50,786.76 crore from Rs 25,47,593.76 in August.

Flows into equity schemes through SIPs touched Rs 8263 crore in September compared to Rs8,230 crore in August. This is the tenth consecutive month when monthly SIP collections have stayed above Rs 8000 crore.

"Although SIP inflow has stabilized, disenchantment towards SIP in the past few months is being reflected both in terms of new SIP registrations as well as in the number of discontinuations," said Rajan Jain, analyst at SBICap Securities. "We expect SIP gross inflows to consolidate in 2019 due to changes in TER (Total Expense Ratio) and almost in-line returns versus the benchmark indices." TER is the total fees that funds charge investors.

Within equity mutual funds, investors made allocation across all categories of funds. About Rs 1560 crore went into large cap funds, Rs 1675 crore into multicap funds, Rs 1277 crore into midcap funds and Rs 896 crore into small cap funds.


Arbitrage funds, which invest in a mix of shares and stock futures, continued to see inflows of Rs 4757 crore in September as rich investors opted for this category over debt funds. They have seen high inflows in the recent past as they enjoy better taxation as compared to debt funds. If withdrawn before a year, gains are taxed at 15% in arbitrage funds, compared to 30% for debt funds.

Hybrid funds such as balanced funds and equity savings funds saw outflows of Rs 1930 crore and Rs 688 crore respectively.

The fixed income category saw outflows of Rs 158,033 crore in September. Liquid funds saw outflows of Rs 1.40 lakh crore in September as corporates withdrew money to pay advance tax and banks withdrew to meet capital adequacy norms, which is usual at the end of every quarter.
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Credit risk funds, which invest in riskier debt securities, saw outflow of Rs2351 crore in September. This is the sixth month the category has seen outflows. Since April, credit risk funds have seen outflows of Rs 16135 crore.

Investor appetite for riskier products in the fixed income category has waned because of the deterioration of financials of Non Banking Finance Companies. Investors are ticking to high quality debt papers these days.

The Banking and PSU debt fund category--one of the most favoured category in the fixed income space over the last one year-- saw inflows of Rs 2065 crore.
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