Despite the boom in the stock market, the trend of investors in equity mutual funds is decreasing. Investment in equity mutual funds declined in August, 2021 as compared to July, 2021. According to data released by the Association of Mutual Funds of India (AMFI) on Wednesday, equity mutual funds had a net inflow of Rs 8,056.80 crore in August. This is 61.15 per cent less than the investment made in July. Equity funds had a net inflow of Rs 20,742.77 crore in July. However, the investment flow in equity mutual funds has remained positive despite the huge shortfall in investments.
What is the reason for the steep decline in investment in equity mutual funds?
After all, what is the reason behind this huge drop in investment in equity mutual funds? Are the investors no longer confident of the market rally and they are busy booking profits? Experts say that there are many reasons for this. In August, the pace of redemption of investors was seen to have increased significantly. In July, investors had withdrawn Rs 17,831.65 crore. But in August this amount increased to Rs 23,144.89 crore.
Experts cite another reason for declining investment in equity mutual funds. The speed with which investors are withdrawing money from equity mutual funds. The same proportion is investing in New Fund Offer (NFO) of Balanced Advantage funds. This may be a good strategy for retail investors as the market is still up and Balanced Advantage funds are known to reduce risk. Mutual fund analysts also say that due to profit booking by the investors of equity funds, the investment in it also seems to be declining. In July, there was an investment of Rs 18,393 crore in equity mutual funds, but in August it came down to Rs 6,894.69 crore.
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Trend towards Balanced Advantage Funds
SBI Balanced Advantage Fund was launched in August. An investment of Rs 14,551 crore was made in this. It was a hybrid scheme, which invests in both debt and equity. ICICI Prudential Flexi Cap Fund was launched in July. It was an equity scheme and it raised Rs 9,808 crore that month.