Inflows into equity mutual funds in July at Rs 37,113 crore were the second-highest monthly numbers ever and marked the 41st straight month of inflows. This was, however, 8.6% lower compared with June figures.
Gross inflows into systematic investment plans (SIP) hit a record high of Rs 23,332 crore in July, up nearly 10% from June, data from the Association of Mutual Funds in India (Amfi) showed. The number of SIP accounts surged to a record 9.34 crore.
“It’s evident that mutual funds have become an integral part of retail investors’ financial strategies. SIP contributions reaching an all-time high reflects the growing financial discipline among retail investors,” Venkat Chalasani, chief executive of Amfi, said.
Melvyn Santarita, analyst —manager research at Morningstar Investment Research India, said: “While initially there were concerns regarding the formation of a coalition-led government, over a period, these have subsided with the government still focusing on growth and development-led policies.”
Of the total equity inflows of Rs 37,113 crore, Rs 16,565 crore came in through the 15 new fund offers (NFOs) launched by several fund houses during July. Meanwhile, the sectoral/thematic funds continued to corner around half of the total equity inflows.
Most categories saw a decline in inflows compared with June, with large-cap and mid-cap witnessing fall of 31% and 35%, respectively. On the other hand, inflows into small-cap funds declined 6.8% month-on-month.
“We saw small-caps getting heavy inflows in the last two years. This is now tapering off as investors are shifting to sectoral funds. It will be interesting to see if this is a shift in risk profile or it is just a blatant near-term return chasing,” said Swarup Mohanty, vice chairman and CEO at Mirae Asset Investment Managers (India).
Santarita, too, highlighted that fund categories which are biased towards large-caps such as large and midcap funds, flexicap funds and value funds saw robust inflows during the month.
“While markets have been in a prolonged bull run, there are concerns about overvaluations in certain areas, particularly in the mid- and small-cap segments. Consequently, investors may be opting to invest in large-cap segments, where valuations are more favorable,” Santarita said.
While equity funds saw smaller inflows in July than in June, hybrid and debt-oriented funds witnessed an increase in investor interest. Inflows into hybrid funds nearly doubled in July to Rs 17,436.09 crore while debt funds saw inflows of Rs 1.2 trillion, compared with outflows of Rs 1.07 trillion in June.