Share schemes ride on market rally and get record inflow of `91,000 cr in 2021′

In 2021, investors will be investing more of their money in equity-focused mutual funds, attracted by strong gains in the underlying stock market. Passive funds were awarded Rs 1.14 lakh crore and hybrid funds Rs 1.02 lakh crore. Passive and hybrid funds benefited from a wave of new fund offerings, with 41 and 8 funds, respectively.

On the other hand, debt mutual funds saw a net outflow of Rs 35,000 crore in 2021 as investors exited the class amid a drop in yields and as investors waited on the sidelines to anticipate likely interest rate hikes by the Reserve Bank of India in kept an eye out. However, the central bank refrained from raising interest rates during the year and continued to support growth more. According to a report from Crisil, the RBI remained tolerant of high inflation, as most of it was due to supply-side factors (oil and commodity prices).

Open-end debt-oriented mutual funds saw inflows of Rs 2.01 lakh crore in 2020 even while equity-oriented funds saw net inflows of just Rs 9,100 crore.

The MF industry recorded a net inflow of Rs 1.14 lakh crore in 2021 through Systematic Investment Plans (SIPs), crossing Rs 1 lakh crore for the first time in a calendar year since AMFI began declaring this data. The last month of 2021 also saw SIP flows come in at their monthly record high of Rs 11,300 crore, having crossed the Rs 11,000 crore mark for the first time in November 2021.

In addition, the number of SIP accounts rose to 4.91 crore, accounting for Rs 5.65 lakh crore of the sector’s assets in December. ETFs become the largest MF category, as liquid funds lose luster. Benefiting from strong inflows from the EPFO ​​and other pension funds, along with new launches and individual investor interest, assets of exchange-traded funds (ETFs) soared ) to overtake liquid funds as the largest MF class in 2021. The class ended 2021 with assets of Rs 3.84 lakh crore compared to Rs 3.61 lakh crore for cash, Crisil said.

The RBI’s Monetary Policy Committee is likely to raise the reverse repo rate during its February review, to narrow the repo rate range to 25 basis points, and follow with a 25-bp increase in the repo rate in March as demand side pressures on inflation begin to mount, Crisil said. The upward movement in yields is expected to diminish the luster of long-dated debt funds, making short-dated debt funds, such as floating-rate funds, and roll-down funds, such as target-maturity funds, better bets for investors.