Decoding The MF Return Formula

Is your fund’s return lower than actual fund’s return? The article explains why that can be so

- 

The month of March 2021 brought cheers to many mutual fund houses as after a gap of eight months the inflows in the equity-dedicated mutual funds turned positive again. The last time such a phenomenon occurred i.e. a positive net inflow in equity schemes was in the month of June 2020 and that too of only ₹240 crore. Those who think that it is due to the March impact as many investors rush to invest in tax savings’ mutual funds would have to re-think since this was not the case. Almost all the categories saw a positive inflow, except for value or contra funds.

Many experts believe that it is too early to judge that the spike in inflows means the return of investors towards equity mutual funds. There is another factor that might have come into play. It is more due to a technical reason due to which there has been a spurt in the inflows. From February 1, 2021, SEBI has mandated the allotment of MF units at the NAV according to the date and time of realisation of fund. As the banks were closed on February 27 due to it being the fourth Saturday and since February 28 was a Sunday, MF units were allotted on March 1, 2021 against all the investment money realised after 3 pm on February 26, 2021.