By Siddhant Mishra
Inflows into equity mutual funds (MFs) in January came in at Rs 12,546.5 crore, showed data released by the Association of Mutual Funds in India (Amfi) on Thursday. This was a sharp rise from December inflows which stood at Rs 7,303 crore.
All categories of equity schemes registered inflows. Midcap and smallcap funds saw inflows of ₹1,628 crore and ₹2,256 crore, respectively. Focused and sectoral/thematic funds, which had seen outflows of close to Rs 164 crore and Rs 204 crore, respectively, in December, witnessed inflows of Rs 183 crore and Rs 903 crore, respectively.
NS Venkatesh, CEO of Amfi, said: “The January data showcase a positive trend in equity MF inflows. Smallcaps have witnessed inflows, majorly driven by retail investors as their investment is for long-term return cycle.”
Total number of folios stood at an all-time high of 142.8 million. Assets under management (AUM) for the industry came in at ₹39.6 trillion, while the average AUM stood at ₹40.8 trillion. Equity AUM stood at Rs.15.06 trillion and debt AUM at Rs.12.37 trillion. Retail AUM stood at ₹20.35 trillion.
Kavita Krishnan, senior analyst – manager research, Morningstar India, said: “The inflows into equity funds came in even as FIIs remained net sellers for the month. While FII selling came in largely owing to factors like the discomfort around valuation, movement of FIIs into other emerging economies and profit booking, domestic investors continued to invest in equity funds.”
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She added that with investors making conscious investment decisions, their overall preference towards investing in dips was evident from the magnitude of flows into smallcaps and midcaps, considering the Nifty SmallCap 100 was among the worst performers in December.
“Encouraging SIP numbers indicate retail investors’ trust in mutual funds. We believe that the SIP inflow momentum has and will continue to balance the FII outflows in the market,” said Venkatesh.
On the other hand, debt funds witnessed significant outflows for the second consecutive month, at Rs 10,315.15 crore. This was despite the money market fund category registering inflows of Rs 6,460 crore.
The short-duration category saw outflows of over Rs 3,800 crore, with the liquid fund seeing a pullout of over ₹5,000 crore and the overnight fund at ₹3,688 crore. The corporate bond and banking/PSU funds, too, saw outflows of Rs 2,333 crore and Rs 1,173 crore.
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“Though most debt fund categories witnessed outflows, long duration, dynamic bond funds and gilt funds with 10-year duration were among the few to witness some inflows. A weakening macroeconomic scenario has likely led to investors turning cautious towards fixed income. While the RBI’s rate hike cycle is expected to ease, it might be a while before we begin to see the impact of the interest rate risks cooling off,” said Krishnan.
Among other schemes, index funds recorded inflows of ₹5,813.16 crore, while gold ETFs witnessed outflows of close to ₹199.43 crore. Overall net flows recorded by the industry stood at ₹11,373 crore for January.