Mutual fund inflows into equity rose 3% month-on-month in August to Rs 38,239.16 crore as sectoral/thematic funds continued to witness robust inflows and largecap funds starting to see some traction, data from the Association of Mutual Funds in India (Amfi) showed.
With 42 consecutive months of inflows, net assets under management (AUM) of equity funds have surpassed Rs 30 lakh crore. Overall, the industry’s AUM rose to Rs 66.70 lakh crore.
New systematic investment plan (SIP) registrations at 6.4 million during August reflect the continued interest of retail investors. The SIP contribution rose to an all-time high of Rs 23,547.34 crore, marginally higher compared to July, to hit a record AUM of Rs 13.39 lakh crore.
“The correction in the markets in the initial part of August provided investors with a good buying opportunity. This is reflected in the strong net inflow numbers for August across the equity categories,” said Himanshu Srivastava, associate director – manager research at Morningstar Investment Research India.
Experts have highlighted the increase in inflows into large-cap funds compared to previous months. In August, largecap funds received inflows of Rs 2,636.86 crore, compared with Rs 670.12 crore in July.
While experts have been pointing to better risk-reward opportunities in large-cap space, inflows into the category have been languishing compared to small-cap and mid-cap funds.
Even in August, small-cap and mid-cap funds garnered higher inflows at Rs 3,209.33 crore and Rs 3,054.68 crore, respectively.
“Two things are driving inflows (in smallcap and midcap funds). One is SIP contribution, which people have already committed. Secondly, people are seeing continued good returns and probably believe valuations are acceptable,” Venkat Chalasani, chief executive of Amfi, said.
In August, while the benchmark Sensex rose 0.8%, the BSE Smallcap index gained 1.3% and the BSE Midcap index rose 0.9%.
Madhu Nair, chief executive officer at Union Mutual Fund, said total investor folios surpassing the 20-crore mark indicates an increase in wallet share and preference for mutual funds as a savings vehicle and tool for wealth creation.
Sectoral/thematic funds continued to contribute significantly to the overall equity inflows. These funds received inflows of Rs 18,117.18 crore in August, compared to Rs 18,386.35 crore in July.
“Investors should be cautious while selecting funds, especially from the sector/thematic category. Such funds offer a very high risk-high return investment proposition and may not fit in the portfolio of every investor,” Srivastava said.