Rising impact of coronavirus infection and bleak market outlook is dampening investors' sentiments as gross inflows into equity mutual funds has touched a 46-month low in May. Equity-oriented schemes sales, including Equity Linked Savings Scheme (ELSS), fell around 11 per cent, month-on-month (m-o-m) to Rs 12,950 crore in May. Though, the fall was much sharper in April, at 51.8 per cent. With this, gross flows into equity schemes fell for the second consecutive month after September 2019. Redemptions fell too, 7.4 per cent in May. As a result, net inflows declined to a five-month low from Rs 6,213 crore in April to Rs 5,257 crore in May. Overall, the net asset under management of equity MFs declined 1.4 per cent m-o-m to Rs 6.5 lakh crore during the month.
After a decade's worst monthly decline in March, markets bounced back in April with a gain of 14.4 per cent but remained in a consolidation mode in May as the Sensex declined nearly 4 per cent.
Equity-oriented schemes derive 87 per cent of their assets from individual investors and their cautious stance towards mutual fund investments was clearly visible in the falling systematic investment plans (SIPs) over the past two months. Retail investors' monthly contributions, which touched its high of Rs 8,641 crore in March 2020, declined 3 per cent each in the following two months.
According to the latest fund folio report by Motilal Oswal Institutional Equities, total equity value of the top-20 asset management companies (AMCs) decreased 1.6 per cent m-o-m in May'20. Among the top-10 funds, the highest monthly decline was seen in HDFC Mutual Fund and Nippon India Mutual Fund which fell 3.6 per cent each, followed by Franklin Templeton Mutual Fund (-2.4 per cent), SBI Mutual Fund (-2.2 per cent) and Axis Mutual Fund (-1.9 per cent).