Equity mutual funds have seen positive inflows for the second consecutive month in February 2010 with net inflows of

Rs 1,514 crore. In January, the net inflows stood at

Rs 980 crore. Gross inflows in equity schemes in February were Rs 5,000 crore, against Rs 7,837 crore

in Januray.

After the entry loan ban in mutual funds came into effect in August 1, 2009, equity funds witnessed net outflows for five consecutive months owing to reluctance of distributors in selling mutual funds without the entry load. Experts say the change in fee structure has finally sunk in and the mutual fund industry, distributors and investors are now getting used to the new policy regime.

Jagannadham Thun-

uguntla, head, equity, SMC Capital, said neither investors could remain out of the markets forever nor could mutual fund distributors shut shop because of the entry load ban. “Now that over six months have passed since the new rule came into existence, things have started settling down and investors are returning back to equity funds,” he added.

When asked if equity market movements have something to do with the turnaround in equity fund inflow trends, he said for the past six-seven months, the market has been moving in a range of 16,000-17,000 points and there was no trigger actually for investors to enter the market. “The positive inflows are more to do with settling of dust following the entry load ban,” he added.

Tax-saving equity funds collected Rs 480 crore in February, against total redemptions of Rs 145 crore during the month. In January, the total gross inflows were Rs 509 crore, against redemptions of Rs 241 crore. These funds usually attract maximum investment in last quarter of a financial year.

Among other fund categories, income funds witnessed a gross inflow of Rs 260,000 crore, while the redemptions in the category were to the tune of

Rs 255,000 crore.

Liquid and money market funds, which form two-third of the mutual fund industry’s assets under management(AUM) continue to see net outflow. The category witnessed a net outflow of Rs 516 crore, against gross inflow of Rs 492,800 crore.

Meanwhile, the month-end AUM in February was Rs 766,869 crore, compared with Rs 758,712 crore in January.