Inflows into equity mutual funds in June was much lower compared to the net inflow of Rs 18,529 crore seen in May, data from the Association of Mutual Funds in India (AMFI) indicates. Equity mutual funds witnessed a net inflow of Rs 15,498 crore in June amid heightened volatility in the stock market and consistent selling by Foreign Portfolio Investors (FPIs). Equity mutual funds witnessed positive momentum for the 16th straight month in June. However, data from the AMFI showed that inflows into equity mutual funds in June was much lower compared to the net inflow of Rs 18,529 crore seen in May.
The lower quantum of net inflow from the previous month could be attributed to investors adopting the cautious path given the ongoing challenges to the investment environment. Equity schemes have been witnessing net inflow since March 2021, highlighting the positive sentiment among investors. All the equity-oriented categories received net inflows in June with the Flexi-cap Funds category being the biggest beneficiary with a net inflow of Rs 2,512 crore. This was followed by the multi-cap fund that witnessed Rs 2,130 crore net infusions.
However, the debt segment saw a net outflow of Rs 92,247 crore in June, as compared to a net withdrawal of Rs 32,722 crore in the preceding month. Overall, the mutual fund industry registered a net outflow of Rs 69,853 crore last month, as compared to a net pull out of Rs 7,532 crore in May. The outflow pulled down the average assets under management (AUM) of the industry to Rs 36.98 lakh crore at the end of June, from Rs 37.37 lakh crore at May-end.
AUM grows 14%
Another data from the Association of Mutual Funds in India indicates that the average assets under management (AUM) for the domestic mutual fund industry grew 13.8 per cent year-on-year to Rs 37.74 trillion for the quarter ended June. The growth in assets was driven by incremental flows into equity schemes. State Bank of India MF cemented its position with industry-beating 23.7 per cent growth in AUM to Rs 6.47 trillion. ICICI Prudential MF saw its AUM increase 11.8 per cent to Rs 4.65 trillion and came second. AUM of HDFC MF slipped marginally to Rs 4.15 trillion in the past year. Kotak MF moved to fourth place, with average AUM growth of 14.6 per cent to Rs 2.82 trillion. It overtook Aditya Birla Sun Life MF, which clocked in just 2.2 per cent growth in AUM.
MF transactions to come under insider trading ambit
Sebi has proposed bringing mutual fund transactions under the purview of stringent insider-trading regulations to prevent abuse of sensitive information by key personnel in the MF industry. Currently, MF units are excluded from the definition of ‘securities’ under the Prohibition of Insider Trading (PIT) Regulations, and buying and selling of MF units is excluded from the definition of ‘trading’. A discussion paper floated by Sebi is open for public comments until July 29.
The proposal comes close on the heels of allegations of front-running at a large fund house.
In the discussion paper Sebi says, “It has observed that a MF Registrar and Transfer Agent (RTA) had redeemed all its units from a scheme while being privy to certain sensitive information. Similarly, it observed a few key personnel of the MF industry redeemed their holdings in the schemes while in possession of certain sensitive information not communicated to the unit holders of the schemes.