Equity mutual funds experienced a surge in inflows, marking a 22-month high in January. Sustained investments in sectoral, small- and mid-cap funds were the primary drivers, while even large-cap funds exhibited robust performance, reaching an 18-month high.
According to data released by the Association of Mutual Funds in India (Amfi) on Thursday, net equity mutual fund inflows recorded a substantial 28% sequential increase, reaching Rs 21,780.56 crore in January.
This figure represents the highest inflow since March 2022. Additionally, the equity segment benefited from three new fund launches in January, collectively amassing ₹967 crore. The inflows also highest that large-cap funds in 19 months stood at Rs 1,287 crore, following a Rs 281 crore outflow in December.
Debt funds also experienced a revival, securing Rs 76,469 crore in January after two consecutive months of outflows. The mutual fund industry’s assets under management (AUM) rose impressively to Rs 52.74 trillion, up from Rs 50.77 trillion in December, marking the industry’s robust appeal and resilience. January also marked the 35th consecutive month of inflows.
“Equity schemes experienced a surge in inflows, reaching approximately ₹21,780 crores in Jan’24, compared to ₹16,997 crores in Dec’23. Sectoral/thematic and small-cap oriented funds were the primary contributors, with contributions of ₹4,804 crores and ₹3,256 crores, respectively. However, this was lower than the previous month’s flows. Multi-cap category funds also witnessed a significant increase, reaching ₹3,038 crores in Jan’24 from approximately ₹1,852 crores in Dec’23,” said Akhil Chaturvedi, Chief Business Officer, Motilal Oswal Asset Management Company
Chaturvedi also added that, Large caps demonstrated positive contributions this month, reversing the net outflows experienced in December 2023. This shift in trend is in line with valuation differentials among large v/s mid and small caps, suggesting that large caps/flexi caps oriented schemes may attract higher flows in the future. In the Hybrid category, MAF observed notable inflows of Rs 7,079 crores, a significant increase from ₹2,420 crores in the previous month.
Despite valuation concerns, small and mid-cap funds continued to attract robust inflows. Mid-cap funds witnessed a 48% month-on-month increase in January to Rs 2,061.18 crore, while small-cap funds saw Rs 3,256.9 crore of net flows for the fourth consecutive month, albeit with a sequential decrease of Rs 600 crore.