Notwithstanding the strong inflow into equity schemes, the net investment in mutual fund schemes in three quarters of this fiscal was down 11 per cent at ₹2.5 lakh crore against ₹2.8 lakh crore logged in the same period last year, largely due to outflow from debt schemes.

Equities resilient

Interestingly, equity schemes had registered a net inflow of ₹91,600 crore in first nine months of this fiscal against an outflow of ₹21,292 crore and hybrid inflows were at ₹89,400 crore against outflow of ₹15,989 crore while passive funds have seen a net inflow of ₹94,000 crore against ₹39,168 crore.

In contrast, debt schemes have reported an outflow of ₹62,900 crore in last three quarters against inflow of ₹3.15 lakh crore in same period last year, largely due to softer interest regime.

Akshat Garg, Manager (Research), Investica, said low yield in debt funds was the prime motivation for the investor to re-allocate investments to equity funds, as targeting even 6 per cent seems to be a big achievement in the debt space and after accounting for tax and inflation, real returns might not convince investors to stay invested even for the sake of risk management of overall portfolio.

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Debt inflows turn negative

Debt flows remained negative at ₹33,200 crore last month against outflow of ₹37,900 crore in November. Asset under debt fund fell three per cent to ₹14.04 lakh crore against ₹14.52 lakh crore registered in the previous month. Himanshu Srivastava, Associate Director, Morningstar India, said one of the reasons for the net outflows from most of the categories could be investors preferring to redeem their debt investments to invest in equity markets, which after a strong rally, witnessed some fall in last two month thus providing a good entry point and also on expectation of better returns.

The major inflow into equity funds was through systematic investment plan which has increased 24 per cent in last three quarters to ₹91,304 crore against ₹73,367 crore recorded in the same period last year.

Akhil Chaturvedi, Chief Business Officer, Motilal Oswal AMC said an inflow of ₹11,305 crore in December was the ninth consecutive month of a new all-time high for monthly SIP contributions.