Mutual funds witness 60% fall in net inflows in 2018-19: Economic Survey

During 2018-19, there was a net inflow of Rs 1,09,701 crore in the mutual fund industry, says Economic Survey. However, the net inflows are 60 per cent lower than last year. Net inflows in 2017-18 stood at Rs 2,71,797 crore. Lower net inflows were mainly due to rise in redemptions during the year. 2018-19 witnessed total redemption worth Rs 242 lakh crore as compared to Rs 207 lakh crore in 2017-18, shows data from Economic Survey.

The fall in net inflows in mutual funds took place despite the double-digit gains in the benchmark indices in equity market. BSE Sensex witnessed an increase of 17.3 per cent from its closing value of 32,969 as on March 31, 2018. Sensex closed at 38,673 on March 31, 2019. During this period, S&P BSE Sensex closed its highest level of 38,897 on August 28, 2018 and it’s lowest of 33,019 on April 04, 2018.

Nifty 50, the benchmark index of National Stock Exchange (NSE) also gained 14.9 per cent to close at 11,624 on March 31, 2019.

2018 has been a bad year for mutual funds. Most equity funds posted uninspiring performance. In fact, 76 per cent equity mutual funds delivered negative returns in 2018, compared to double-digit returns in 2017. Equity mutual funds account for around 40 per cent of the total assets managed by mutual funds.

Industry analysts blame uncertain market conditions, liquidity woes, trade wars and weak macros for the poor show.

Debt space got bad news as well. The pain started with IL&FS defaulting on its payment for inter-corporate deposits and commercial papers in June 2018. The worries heightened with defaults by DHFL, Zee group companies, Reliance Capital companies and Yes Bank on their debt papers subsequently.

Economic Survey also points out that the cumulative net assets under management of all mutual fund houses taken together increased by 11.4 per cent to Rs 23,79,584 crore in March 2019 from Rs 21,36,036 crore in March 2018.