Net investments in active equity schemes rose to a 12-month high of Rs 20,500 crore in March. The robust tally was underpinned by investments through the systematic investment plan (SIP) route, which breached the Rs 14,000-crore mark for the first time, reveals data released by the Association of Mutual Funds in India (Amfi).
Industry players said investors stepped up buying as valuations turned attractive, with the benchmark S&P BSE Sensex and the National Stock Exchange Nifty indices dropping to their lowest levels in five months. From March lows, the indices have now gained nearly 6 per cent.
The total investment through SIPs stood at over Rs 1.5 trillion in 2022-23.
N S Venkatesh, chief executive officer, Amfi, said the strong flows through SIPs showcase resilient investor behaviour.
“SIP inflows continue to soar, breaking the record on a month-on-month basis. It would not be overkill to say that the retail investor is the hero of the markets. The spike in investors witnessed in the post-pandemic period, despite volatility due to global geopolitical reasons and inflation, is also a cue to resilient investor behaviour,” he said.
In 2021-22, mutual funds (MFs) added over 4 million new investors, taking the total unique investor count to 37.7 million.
March also marked a change in fortunes for most debt funds: inflows surged multifold as investors rushed to invest before the change in taxation regime came into effect in April.
Among active debt schemes, corporate bond funds received the highest net inflows at Rs 15,600 crore, followed by banking and public-sector undertaking funds with net inflows of Rs 6,500 crore.
Notwithstanding the spike in flows into select schemes, debt funds registered an overall net outflow of Rs 57,000 crore in March.
Outflows are seen in liquid and other shorter-horizon debt schemes at the end of every quarter as companies make redemptions to meet their tax liability.
Index funds, including equity and debt, raked in over Rs 27,000 crore. The majority of these inflows are likely to have gone into debt index funds, popularly known as target maturity funds (TMFs).
A recent report by Value Research had pegged the inflows into TMFs in the last week of March at 15,265 crore.
In a surprise move on March 24, the government announced debt MFs would no longer attract long-term capital gains tax or get indexation benefits. Instead, gains made on such investments would be charged according to individual tax slabs from April 1.
Speaking on the issue, Venkatesh said debt funds still have a lot to offer to investors.
“Investors should look at debt funds beyond tax efficiency. These funds also provide investors with real-time liquidity, enabling them to withdraw money within a day. In the long term, the debt fund offers the benefit of interest-rate movements. Investors must look at a balanced portfolio with debt funds in their pool,” he said.
As a consequence of outflows from shorter-horizon debt schemes, the average assets under management (AUM) by MFs were lower in March at Rs 40 trillion. In February, the AUM was Rs 40.7 trillion.
A total of 2.2 million SIP accounts were registered last month, taking the total SIP count to 63.6 million.
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