Inflows into equity MFs decline 16% in April at Rs 18,917 cr

The Indian mutual fund industry continued its thumping march in April 2024, with its net AUM standing at Rs 57,25,897.98 crores. The figure stood at Rs 53,40,194.64 crores last month. Equity mutual funds registered their 38th consecutive month of positive inflows, while liquid funds saw maximum inflows (Rs 1,02,751.50 crores) in the debt fund category. However, the net inflows in equities witnessed in April 2024 were lower by 16.4% at Rs 18,917 cr than the net flows seen in March 2024, which stood at Rs 22,633.1 crores.

Says Nehal Meshram, Senior Analyst, Manager Research, Morningstar Investment Research India Private Limited, “After massive outflow in March, debt-oriented mutual funds witnessed a sharp turnaround in April as they attracted Rs 1,89,890.52 crore. In March, the category had witnessed an outflow of Rs 1,98,298.90”.

“Liquid funds saw the highest net inflows for the month, representing 54% of the overall inflow. This was followed by the money market funds that attracted Rs 34,084.11 crore and overnight funds which witnessed a net inflow of Rs 21,195.42 crore. This is a natural and expected phenomenon at the beginning of the financial year. After settling their tax liabilities for the previous financial year in March, corporates deposit their surplus investible funds for a short period. Liquid funds and money market funds are favored choices for such investments”, she continued.

Among the debt fund categories, the three categories that witnessed highest net outflows in April 2024 were, medium duration funds (Rs 425 crore), Banking and PSU funds (Rs 404.55 crores) and Credit Risk funds to (Rs 358.96 crores).

Indicative of growing investor confidence in the markets, the SIP contribution for last month was Rs 20,371.47 crores, as opposed to Rs 19,270.96 crores in March. The number of SIPs also touched an all-time high at 8,70,11,401 last month, as compared to 8,39,71,299 in March 2024. About 63 lakh new SIPs were registered last month. April also saw the launch of 9 open-ended schemes, which managed to raise Rs 1,532 crores.

Amongst equities, sectoral/thematic funds saw the highest inflows (Rs 5,166 crores),  followed by multi-cap funds, which amassed Rs 2,723.8 crores during April.

Small-cap funds, which had witnessed net outflows of Rs 94 crores in March 2024, regained momentum with inflows worth Rs 2,807 crores in April. Even mid-cap funds, which had seen a dip in their inflows in March (Rs 1,017.69 crores) clawed back with inflows worth Rs 2,208.7 crores in April. As Melvyn Santarita, Analyst, Morningstar Investment Research India Private Limited notes, “both the mid and small cap segment witnessed minor corrections in March 2024, which was perhaps capitalized on by investors in the subsequent month with fresh purchases. Favorable market conditions over the last couple of years saw investors getting high returns in these segments and consequently, investors have also flocked to these categories with ever increasing flows”.

Large-cap funds too, saw roaring inflows worth Rs 5,124.26 crores. Notably, the large and midcap category saw the third highest flows during the month among the equity categories with Rs 2,638.9 crores.

For those mulling over their KYC status and the impact it might have on their mutual fund investments , AMFI data also revealed that 93% of mutual fund accounts in the country have their KYC status as either validated or registered. Only 3% accounts had their KYC status as ‘hold’.