Despite small-cap funds seeing a deluge of money from investors, inflows into mutual fund equity schemes declined by four per cent in January, which was marked by a nearly five-fold surge in gold exchange-traded fund (ETF) inflows, amid uncertainty over the global economic crisis and the possibility of gold gaining faster than equity investments.
Flows into equity schemes dropped to ₹39,688 crore from ₹41,156 crore recorded in December
Himanshu Srivastava, Associate Director- Manager Research at Morningstar Investment Research India, said gold ETFs saw their highest-ever monthly net inflow as the ongoing volatility in domestic and global equity markets heightened investors’ risk aversion, prompting many to seek refuge in safe-haven assets like gold ETFs.
Moreover, he said expectations of further interest rate cuts by major central banks, including the US Federal Reserve have increased the appeal of gold as a non-yielding asset. Lower interest rates reduce the opportunity cost of holding gold, making it a more attractive investment, he added.
The equity assets under management slid four per cent to ₹29.47 lakh crore against ₹30.57 lakh crore largely due to mark-to-market loss, according to the Association of Mutual Funds in India data released on Wednesday.
SIP inflows were down a tad at ₹26,400 crore against ₹26,459 crore. SIP account closure hit a high of 61 lakh last month due to the elimination of 25 lakh accounts after a reconciliation between the Registrar and Transfer Agents and exchanges. The outstanding SIP accounts dipped for the first time in recent years to 10.27 crore (10.32 crore).
SEBI had mandated that SIP paused for over three months should accounted as closed with effect from last April warranting a reconciliation in January.
Venkat Chalasani, CEO, AMFI said that given the current trend and SIP inflows, the industry does not expect any major redemption pressure or fall in equity inflows as investors are now confident of equity investment through MFs.
On the possibility of more reconciliation of SIP accounts, he said that implementation of SEBI norms is in process and further reconciliation may be considered in February.