Equity ETFs net inflows too shrank.
Balanced funds, once a hot favourite of investors, have started losing sheen. Investors sold balanced fund schemes worth Rs 952 crore during January. This was net of purchases.
Over the last five to six months, balanced funds have witnessed a steady decline in interest from investors. A year ago, during January 2018, investors poured in Rs 7,665 crore in balanced funds. But from the beginning of the current financial year, the inflows started declining and now we are witnessing a net outflow.
Financial advisors say this is due to rampant miss-selling. According to them, these funds were treated as fixed income by the investors. The sharp fall in market post FY18-19 budget saw dividends from these funds disappearing. Besides, AMCs also started discouraging investors from taking dividend option and go for systematic withdrawal option. The latter is tax efficient.
The net inflows into pure equity funds have also been on the decline. For January 2019, the net inflow was down by almost 15 % at Rs 4914 crore.
Arbitrage funds that are used for parking short term investments, also posted net outflows of Rs. 1076 crore, compared to outflows of Rs. 2076 crore in the previous month. This reflects the volatility in the market.
Equity ETFs net inflows too shrank. The net inflows in January stood at Rs. 721 cr, vs Rs. 10,878 cr in December. This is so because, there were no ETF launches during January.
However, the only category to witness healthy flows was the equity linked savings scheme. With the ongoing tax saving season, the ELSS category’s net inflows jumped up by almost 48% to Rs. 1,244 crore, over last month.
The only silver lining is the inflows coming in through Systematic Investment Plans (SIPs). The SIPs inflows in January stood at Rs 8063 cr vs Rs. 8022 cr in Dec.
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