Equity assets fall even as net flows into equity schemes surge 33%

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The net inflows into equity schemes rose to a four-month high of Rs 111.72 billion in September. The net inflows into equity and equity-linked saving schemes (ELSS) were 33 per cent higher than the previous month. 
While the assets under management (AUM) of these schemes declined by 7 per cent, their share of industry AUM rose by 200 basis points, as investors pulled out a combined Rs 2.4 trillion from liquid and income schemes. At Rs 7.5 trillion, the equity AUM accounted for 34 per cent of industry assets. According to experts, the fall in AUM of equity schemes could be attributed to the fall in prices of these schemes’ underlying equity assets.
The recent decline in markets has hurt the performance of equity schemes. Data from Value Research showed that at least two of every five diversified equity schemes had given negative returns in the first six months of FY19. 
The monthly data released by the Association of Mutual Funds in India (Amfi) also showed that the overall industry assets had shrunk 12.5 per cent to Rs 22 trillion in September. Experts attributed this to the large quantum of outflows seen in the debt market schemes. However, the flows coming in through the systematic investment plans (SIPs) remained intact. The contribution through SIPs stood at Rs 77.27 billion, rising marginally from the previous month’s tally. 
The recent volatility in equity markets has made investors nervous. Advisors say investor queries have spiked in the past few days. “We are asking investors to maintain a long-term view, without getting perturbed by market swings,” said another advisor. Experts fear if the market volatility continues to be high, investors might start pulling out and wait for things to stabilise.   

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