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MF inflows remain steady despite market volatility

Author: Debasis Mohapatra/Monday, March 19, 2018/Categories: Mutual Funds

MF inflows remain steady despite market volatility

Mumbai, March 19 - Mutual fund inflows remain almost steady in recent months despite market volatility and the reintroduction of Long Term Capital Gains (LTCG) Tax in this year’s budget.

Not only inflows, the industry has also seen increase in its reach with more number of investors coming from smaller towns of the country.

According to data available with AMFI, equity funds including ELSS witnessed monthly net inflows of Rs 16,268 crore in February this year, which is 5.7% higher over January and 150% over the same period of last financial year.

“The increase was mainly driven by sustained inflows through Systematic Investment Plans (SIPs),” rating agency ICRA said in a report.

This is despite the fact that both equity indices, Sensex and Nifty corrected around 8% from its life time high in February on the back of global sell-off coupled with profit booking by investors post imposition of LTCG tax.

The MF industry not only witnessed higher inflows into equities, it also saw higher participation among investors from smaller towns.

According to AMFI data, AUM growth from B15 towns witnessed 42% jump to reach Rs 4.36 lakh crore at the end of February 2018 compared with Rs 3.08 lakh crore in the year-ago period.

This trend indicates a greater appetite for equities among investors in smaller cities despite increased market volatility.

“Investors now understand that volatility is a part of the equity market. So, domestic investors with long term outlook are sticking on to their current investment portfolios,” Melvin Joseph, Founder of Mumbai-based advisory firm, Finvin Financial Planners told the Finapolis.

According to market experts, investors should put in money in mutual fund schemes through SIP route than investing bulk amount.

Typically, SIP helps in beating the market volatility as investors can average out a purchase without worrying about the market phase.

According to AMFI data, there is 51% rise in SIP contribution to mutual funds till the second week of February of this year. During April-June period of this financial year, total inflows through SIP route stood at Rs 53,600 crore.  

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