Net inflows into equity mutual funds (MFs) fell 11.7% month-on-month to Rs 7,626 crore in July, driven by outflows from large-cap funds, according to the Association of Mutual Funds in India (AMFI).
Large-cap funds saw net withdrawals of Rs 1,880 crore, while net inflows into small-cap funds remained strong at Rs 4,171 crore. SIP contributions reached a fresh high of Rs 15,245 crore — breaching the Rs 15,000-crore mark for the first time.
Assets under management (AUM) for SIPs stood at Rs 8.32 trillion in July, compared to Rs 7.93 trillion in June. The number of SIP accounts were also at a high of 68 million, compared to 66.5 million last month.
“Overall, the industry witnessed growth post the quarter-ending factor in June, wherein institutional investors redeemed due to the quarter-end phenomenon. All-time high of equity markets has led to profit-booking. Investors should consider asset allocation products and continue SIPs,” said Manish Mehta, national head of sales and marketing at Kotak MF.
Multi-cap (Rs 2,500 crore), large- & mid-cap (Rs 1,327 crore), and mid-cap (Rs 1,623 crore) were other categories to see healthy inflows. On the other hand, focused funds saw the exit of over Rs 1,000 crore, while the ELSS and flexi-cap categories saw cumulative outflows of more than Rs 1,500 crore.
Equity MFs had recorded net inflows of Rs 8,638 crore in June.
However, after registering net outflows of over Rs 14,000 crore in June, debt funds turned the corner, raking in `61,440 crore in July.
Close to Rs 52,000 crore came into the liquid fund category and Rs 8,600 crore into money market funds, though overnight funds saw a Rs 10,747-crore outflow.
The ultra-short duration and low duration funds saw cumulative inflows of almost Rs 10,000 crore, while the short and medium duration categories saw outflows of Rs305 crore and Rs 68 crore, respectively.
“Given the interest rate scenario and uncertainty over the direction, many investors may have chosen to continue to investing in categories with one year or less maturity profile,” said Himanshu Srivastava, associate director — manager research, Morningstar India.
However, the medium-to-long and long duration funds saw inflows of Rs 316 crore and114 crore, while Gilt funds and floater funds saw healthy inflows too.
“There was another section of investors who chose to take some risk. Anticipating a change in the interest rate cycle, they invested in categories like Gilt, Dynamic Bond, Medium-to-Long Duration, and Long Duration funds, which stands to benefit if the interest rate cycle reverses,” added Srivastava.
Among other categories, both index funds and ETFs showed a reversal in trend. While the former saw inflows of 1,179 crore after a905-crore outflow in June, the latter witnessed a Rs353-crore outflow in July, after a stellarRs 3,400-crore inflow last month.
Gold ETFs saw inflows of Rs 456 crore, while multi-asset allocation funds also reported a healthy Rs 1,382-crore inflow and arbitrage funds raked in Rs 10,074 crore.
“Short-term debt fund inflows continue due to treasury management by banks and corporates, while hybrid categories like multi-asset allocation funds have seen increased investor interest,” said N S Venkatesh, CEO of AMFI.
Net AUM for the industry stood at `46.37 trillion as on July 31, while the average AUM for July was Rs 46.27 trillion.
MF folios reached an all-time high of 151.4 million in July, as against 149.1 million in June. Retail folios were also at an all-time high of 120.8 million in July vis-à-vis 119 million in June.
“Industry AUM have grown 25% year-on-year, underscoring MFs’ significance in the financialisation of savings,” said Venkatesh.