The growing cases of coronavirus infection and the softening of the stock market have had a profound impact on investors’ settings. Due to this, investment in equity mutual funds has reached a 46-month low in May.
Equity mutual funds put money from investors in the stock market. Investment in equity-based schemes like Equity Linked Savings Scheme (ELSS) has dropped by 11 per cent to Rs 12,950 crore. However, it declined by 51.8 per cent in April. Thus, equity schemes have seen a first consecutive month of decline since September 2019.
However, the withdrawal rate of these schemes has also declined by 7.4 per cent in May. Due to this, net investment in equity mutual fund schemes has reached a five-month low during the month of May. It was Rs 5,257 crore in May as compared to Rs 6,213 crore in April. Overall, asset under management of equity mutual fund schemes declined 1.4 per cent to Rs 6.5 lakh crore.
Stock markets gained 14.4 per cent in April after nearly a decade of worst monthly decline, but the Sensex again saw a 4 per cent drop in May.
87 per cent of investments in equity oriented schemes are made by individual or small investors and these days they are very conscious of investing. The attitude is also understandable in the last two months that investment in the systematic investment plan (SIP) has been declining in the last two months. The monthly contribution of small investors has been at a high of Rs 8,641 crore in March 2020 but has declined by about 3 per cent in the next two months.
According to the latest fund folio report of Motilal Oswal Institutional Equities, the total equity value of top 20 asset management companies (AMCs) declined by 1.6 per cent in May. The highest monthly decline has come in the equity value of HDFC Mutual Fund and Nippon India Mutual Fund. Both of them declined by 3.6 per cent. The equity value of Franklin Templeton Mutual Fund has declined by 2.4 per cent, SBI’s value by 2.2 per cent and Axis Mutual Fund by 1.9 per cent.