In April 2022, equity fund purchases were largely subdued due to tepid markets. May 2022 was no different in terms of market volatility, but equity fund flows improved compared to April. However, debt funds have been sold off heavily and this could largely be attributed to the RBI’s hawkish stance. We will come back to the history of the debt fund later. NFO collections in May 2022 were NIL due to freezing of fresh NFOs. However, the good news was for the SIP, which came back above the Rs 12,000 mark in May 2022.

MF’s overall assets under management in May 2022 fell sharply to 37.22 trillion rupees due to the sale of debt funds and the absence of NFOs combined with the depletion of equity values ​​in a market falling. However, May 2022 was a volatile month amid Fed policy, rising inflation, and geopolitical concerns. Despite this, conviction in equity funds seems to have held up.

Data source: AMFI

The MF’s aggregate net outflow for April 2022 stood at Rs (7,533) crore. This was largely explained by cash outflows from open ended debt of Rs (32,722) crore plus outflows of Rs (10,037) crore from closed fixed term plans (FTPs). All classes of open-end equity and hybrid funds recorded net inflows in May 2022. The mix of assets under management in May 2022 was composed of income funds (35.53%), equities (35.77%), hybrid funds (12.97%) and passive funds and solutions. (14.97%). The remaining 0.76% were closed funds.

In March 2022, the assets under management of active equity funds had exceeded that of debt funds. This lead was maintained in April 2022, although the gap has narrowed. However, in May 2022, the gap has narrowed further as equity funds experience huge value depletion amid falling markets. Overall, MF’s assets under management increased by 12.58% year-on-year from MUR 33.06 billion in May 2021 to MUR 37.22 billion in May 2022. Now hybrids, solution funds and passive funds represent 27.94% of total assets under management, emerging as a strong asset class.

May 2022 debt fund flows hit by RBI hawkishness

If April 2022 had seen a strong recovery in flows to debt funds, May 2022 again saw net outflows from debt funds. Overall debt fund outflows were Rs (32,722) crore in May 2022. Selling was largest in low duration funds, short duration funds and money market funds, but even fixed income funds longer term saw the sale in the month of May 2022.

Let’s first look at the categories of debt funds that saw inflows in May 2022. The main inflows were in just two fund categories. There were inflows of Rs 15,071 crore in overnight funds and Rs 1,777 crore in liquid funds. All other fund categories experienced net outflows in May 2022.

Let us now turn to the outflows by category of debt funds in May 2022. These included money market funds Rs14,599 crore, short duration funds Rs8,603 crore, ultra short duration funds Rs7,105 crore, low duration funds Rs6,716 crore, floating funds Rs5,286 crore, dynamic bond funds Rs2,414 crore, corporate bond funds Rs2,147 crore, medium duration funds Rs1,222 crore and bank funds and PSUs Rs1,121 crore . There were no real subtle trends, as even the normally popular floats saw strong sales.

Equity Fund received a SIP boost in May 2022

The disheartening news is that stocks’ assets under management are significantly lower due to depleted market values. The good news is that equity fund inflows were higher than in April 2022 despite the absence of NFO. The increase came largely from SIP flows which returned to Rs 12,286 crore in May 2022, ensuring steady inflows of equity funds.

After recording record equity fund inflows of Rs 28,464 crore in March 2022, net equity fund inflows moderated in April 2022 at Rs 15,890 crore. However, equity fund flows rebounded to Rs 18,529 crore in May 2022, which is quite sizable in volatile markets. Robust SIP entries compensated for the flows, amid the NFOs drying up.

For the month of May 2022, not a single category of equity funds experienced net outflows, despite market volatility and uncertainty about interest rates and the geopolitical situation. Capital inflows in May 2022 were largely triggered by the steady increase in SIP flows, indicating that investors were persisting with SIPs in tough markets.

Let’s come to the specific contributions. In May 2022, multi-cap funds and flexi-cap funds led the way with inflows of Rs4,204 crore. The large cap funds raised Rs 2,485 crore while the large and mid cap funds saw inflows of Rs 2,414 crore and the sector fund continued to attract inflows of Rs 2,292 crore . Other categories of equity funds that saw large inflows in May 2022 were mid cap funds Rs 1,832 crore, small cap funds Rs 1,769 crore, focus funds Rs 1,549 crore and the funds worth Rs 1,158 crore.

An important data point for equity fund flows is also the increase in folio. By the end of May 2022, stock folios touched an all-time high of 8.85 crore out of total mutual fund folios of 13.33 crore; i.e. 66.40% share of all folios.

Hybrid fund flows decline, but passive flows robust in May 2022

Hybrid funds recorded outflows of Rs3,604 crore in March 2022 and inflows of Rs7,240 crore in April 2022. May 2022 saw hybrid fund inflows slow to Rs5,123 crore. Balanced advantage funds continue to be the favorites with inflows of Rs 2,248 crore, followed by aggressive hybrid funds at Rs 1,381 crore and arbitrage funds at Rs 1,007 crore. Other hybrid fund categories also attracted weaker inflows in May 2022.

Passive funds continued their surge in May 2022 with robust inflows at Rs 12,229 crore as investors sought lower cost alpha. The passive push was led by equity and debt index ETFs with inflows of Rs 6,056 crore and index funds at Rs 5,723 crore. weaker. The big story of the past 2 years has been the inexorable rise of passive fund categories across all AUMs in the mutual fund segment.

May 2022 Mutual Fund Flow History Summary

Overall, mutual funds recorded net outflows of Rs (7,533) crore in May 2022, largely due to outflows from open-end and closed-end debt funds. All categories of equity and hybrid funds saw robust inflows in May 2022. The big bright spot was the rebound in SIP flows to Rs 12,286 crore in May 2022, a clear indication that SIPs are rapidly emerging as a hot spot. stable boarding for retail investors.