Flow into equity funds surge 42%

Driven by investors’ interest in small-cap funds, inflow in equity mutual funds surged 42 per cent month-on-month to nearly Rs 20,000 crore in October despite the risk-off sentiment in the stock markets.

This was way higher than Rs 14,091 crore inflow seen in the category in September. Before this, the inflow was at Rs 20,245 crore in August, according to the data from the Association of Mutual Funds in India (AMFI) released on Thursday. Inflow through SIPs (Systematic Investment Plans) hit a fresh all-time high of Rs 16,928 crore in October, surpassing the previous high of Rs 16,042 crore in September.

“SIP numbers show consistent month-on-month growth, underlining the strength of systematic investment plans. High SIP account openings indicate a growing, committed investor base,” NS Venkatesh, Chief Executive at Amfi, said.

Going by the data, equity mutual funds witnessed a net inflow of Rs 19,957 crore in October, making it the 32nd consecutive month of net infusion.

All the categories experienced inflow in equity segments. The equity category was also aided by four new fund launches in October which garnered Rs 2,996 crore.

“The month of October, the equity markets continued to experience a risk-off sentiment, with the Index falling below 19,000 levels. Despite this fall, equity mutual funds continued to exhibit resilience, recording a significant net inflow of Rs 19,957 crores v/s Rs 14,091 crore observed in September,” Akhil Chaturvedi, Chief Business Officer, Motilal Oswal Asset Management Company, said.

Among the equity asset class, the small cap category attracted the highest inflows to the tune of Rs 4,495 crores during the month. This was followed by Rs 3,896 crore in thematic funds.

“While the flows in the small-cap category have been consistently high over the past many months, in October it was also aided by the launch of Baroda BNP Paribas Small cap fund which garnered Rs 1,103 crore,” Melvyn Santarita, Analyst – Manager Research, Morningstar Investment Adviser India, said.

Interestingly, the large-cap category which has witnessed five consecutive months of net outflows finally turned the corner as it garnered Rs 724 crore in October, reflecting broader market recovery.

Apart from equities, debt-oriented schemes witnessed a net inflow of Rs 42,634 crore in October after withdrawing funds in the past two months, primarily due to increased flows in the liquid fund category.

The debt segment had witnessed a net outflow of Rs 1.01 lakh crore in September and Rs 25,873 crore in August. All debt categories, barring overnight funds, low-duration funds, medium-duration funds, credit risk funds, and banking & PSU funds, attracted inflows.

Liquid funds saw the highest net inflow of Rs 32,964 crore in the month under review as against the net outflow of Rs 74,177 crore in September. Investor sentiment towards the gilt fund category was favourable during the month as the category witnessed net flows of Rs 2,000 crore.

This could be attributed to investors opting to invest in government papers offering attractive yields in anticipation of a change in interest rate cycle in future, Neha Meshram, Senior Analyst, Manager Research at Morningstar Investment Adviser India, said.

Additionally, the quantum of net flows in Gold ETFs rose to Rs 841 crore in October from Rs 175 crore in the preceding month.

“With ongoing geo-political tensions, fear of continued hike in interest rates in the US, inflation still higher than expectations, and growth rate slowing down, the appeal of Gold as a safe haven and hedge against inflation is expected to continue.

“Moreover, gold prices in recent times have come off from the all-time high levels, thereby providing some buying opportunity, particularly after a sharp rally it witnessed since March this year,” Morningstar’s Santarita said.
Overall, the 44-player mutual fund industry has witnessed an inflow of Rs 80,528 crore in the month under review as compared to an outflow of Rs 66,192 in September. This helped mutual fund industry assets under management (AUM) to reach Rs 46.71 lakh crore in October-end as compared to Rs 46.58 lakh crore at the end of September. — PTI