Investors exit mutual funds to book profit

The net inflows into equity schemes offered by mutual funds have seen a sharp slowdown this year as a section of early investors chose to book profits after seeing a steep appreciation in their net asset value (NAV) during the last 2-3 years while the near-term uncertainty caused in the global markets due to Brexit impacted fresh inflows.

The average monthly inflows in equity schemes during the first six months of this year stood at Rs 1,800 crore, 80 per cent down when compared to the same period last year.

According to the data available with industry body Association of Mutual Funds of India, fund houses had seen net average monthly inflows of Rs 9,365 crore during the first six months of 2015.

“There is a bit of churning in the equity schemes. Investors who had entered the market during the early phase of the rally had booked partial profits after seeing a fairly good appreciation in their investment value over the last 2-3 years,” said S. Krishnakumar, CIO, equity and executive vice-president at Sundaram Asset Management.

According to him, the almost flattish returns provided by the equity markets during the past several months were also one of the factors that prompted investors to cash out of the markets.

Since the markets are unlikely to generate a hefty return in the near term, Mr Krishnakumar said investors are taking a long term view of the equity markets and are therefore investing through the SIP instead of making bulk investments. “This is another reason why the pace of inflows into equity schemes have slowed down in recent months,” he added.

After touching a lifetime high of 9,119.20 in March 2015, the 50-share NSE Nifty drifted lower amidst concerns regarding global growth slowdown.

While the index had hit a 52- week high last month, it is still finding it difficult to scale above the psychological 9,000 level mark.