Investors pumped in more than Rs 1.11 lakh crore in equity-oriented mutual fund (MF) schemes in 2018-19, a decline of 35 per cent compared to Rs 1.71 lakh crore inflows in 2017-18, according to the industry data.
However, this was the fifth successive year of net inflows in equity mutual funds, according to the Association of Mutual Funds in India's (AMFI) data.
In 2017-18, the markets were on a roll but in 2018-19 the markets were very volatile due to various factors, including border tensions with Pakistan, AMFI Chief Executive Officer N S Venkatesh said.
There was a steep correction in small and mid-cap stocks also. The market volatility and corrections pulled down net inflows in the equities in 2018-19, he said.
"But despite that the current inflows of 1.11 lakh crore is a substantial investment by the mutual fund industry into the equities segment which is more than FII investments into the country," he added.
The flows into equity funds in 2018-19 were lower than the flows in 2017-18 primarily due to the equity markets displaying a fair bit of volatility which made some investors take a break from making fresh equity investments, said Kaustubh Belapurkar, manager research, Morningstar.
According to the AMFI data, net inflows into equity funds, which also include equity-linked saving schemes (ELSS), were Rs 1,11,423 crore in 2018-19 as against Rs 1,71,069 crore in the preceding fiscal.
Net inflows in these funds were Rs 70,367 crore in 2016-17, Rs 74,024 crore in 2015-16 and Rs 71,029 crore in 2014-15, respectively.
However, they had witnessed a net outflow of Rs 9,269 crore in 2013-14.
The assets under management (AUM) of equity MFs stood at a record high of Rs 7.73 lakh crore at the end of March 2019 as against Rs 7.50 lakh crore in March 2018, an increase of 3 per cent.
During 2018-19, the SIP (Systematic Investment Plans) accounts grew by 51 lakh to 2.62 crore from 2.11 crore in March 2018.
Besides, SIP contribution to the industry surged to Rs 92,693 crore in 2018-19, from Rs 67,190 crore in the preceding fiscal.
MFs are investment vehicles made up of a pool of funds collected from a number of investors. The funds are invested in stocks, bonds and money market instruments, among others.