Strong SIP book and lower returns from traditional investments made equity mutual funds an attractive investment destination for investors with equity-oriented funds receiving a staggering net inflow of Rs 1.64 lakh crore in 2021-22.
This comes following a net outflow of Rs 25,966 crore during 2020-21, data from the Association of Mutual Funds in India (Amfi) showed.
Going ahead, we expect the growing inflow trends in equity mutual funds to sustain given the current economic condition and markets, Manish Kothari- CEO and Co-Founder, ZFunds, said.
According to the data, equity mutual funds witnessed a net inflow of Rs 1,64,399 crore in the entire 2021-22. This included an all-time high inflow of Rs 28,464 crore last month.
Geopolitical tension due to the raging war between Russia and Ukraine and concerns over the surging crude prices triggered a sharp correction in the market towards the end of February and early March. The correction provided investors a good buying opportunity, which they didn't fail to capitalize.
The robust inflow pushed the asset base of equity mutual funds by 38 per cent to Rs 13.65 lakh crore at the end of March this year.
The equity category has been witnessing consistent net inflows since March 2021, after the second wave of COVID hit India and resulted in the correction in the markets.
"Despite concerns, the growth outlook over the long term has remained strong which maintained positive sentiments among investors. Also, the perception that despite intermittent corrections the markets would continue to surge has prompted many investors to make the most of the dips in the markets and invest," Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, said.
Moreover, relatively lower returns from traditional investments have also made equity mutual funds an attractive investment destination for investors, he added.
Mutual fund investors have only consolidated on their steadily rising returns driven by a disciplined SIP (systematic investment) savings approach, Amfi Chief Executive NS Venkatesh said.
Further, folio numbers, or investors' accounts in equity-oriented funds also grew from 6.64 crore in April 2021 to 8.6 crore in March 2022, which is a growth of 29 per cent.
This is reflective of investor confidence in the mutual asset class.
Additionally, the SIP book has also grown consistently from Rs 8,596 crore in April 2021 to an all-time high of Rs 12,328 crore in March 2022. With this, inflow through the SIP route surged to Rs 1.24 lakh crore in the just concluded financial year from Rs 96,080 crore in the preceding fiscal.
Moreover, mutual funds have currently about 5.28 crore SIP accounts through which investors regularly invest in mutual fund schemes. SIP has been gaining popularity among Indian MF investors, as it helps in Rupee Cost Averaging and also in investing in a disciplined manner without worrying about market volatility and timing the market.