By Siddhant Mishra
Net inflows into equity mutual funds (MFs) in November slumped to a 21-month low of Rs 2,258 crore — a 75% fall from the Rs 9,390 crore in October — showed data released by the Association of Mutual Funds in India (Amfi) on Friday. The reason: gains by benchmark indices led to profit-booking by investors, which led to outflows from retail schemes. This was the 21st consecutive month of inflows for equity schemes.
Melvyn Santarita, analyst-manager (research), Morningstar India, said: “Within equities, categories like sectoral funds, mid-caps, and small-caps saw the largest net inflows while categories like large-caps and flexi-caps witnessed the largest net outflows. Interestingly, the net outflows in large-caps and flexi-caps of Rs 1,038.84 crore and Rs 863.43 crore have come after a prolonged period of net inflows every month. The last time these categories witnessed net outflows was in August 2021 for large-caps and February 2021 for multi-caps.”
Among other schemes, Index funds recorded inflows of Rs 8,601 crore, while Gold ETFs witnessed outflows of close to Rs 195 crore. Inflows in mid-cap and small-cap funds stood at Rs 1,176.3 crore and Rs 1,378 crore, respectively.
However, SIP contribution in November hit a record high of Rs 13,306.49 crore, compared to Rs 13,040.64 crore last month. SIP AUM stood at Rs 6.83 trillion, registering a month-on-month change of Rs 19,071 crore. The number of SIP accounts stood at 60.4 million, an addition of 1.12 million from October. “MF investors have shown resilience and continue to invest in SIPs, with consistent contribution month-on-month,” said N S Venkatesh, chief executive of Amfi.
Net assets under management (AUM) for the industry crossed the Rs 40-trillion mark in November, with the figure at Rs 40.37 trillion and the average AUM at Rs 40.49 trillion. Retail AUM stood at Rs 20.91 trillion, while the average AUM stood at Rs 20.78 trillion. “Rate hikes will continue to impact global markets but not for long; the MF industry has performed well irrespective of that. There have been outflows from retail schemes as people are encashing profits, with the reason being increased consumption owing to the festive season. Retail investors have faith in the growth of the MF industry and, therefore, will re-enter the market quickly,” said Venkatesh.
On the other hand, net inflows into debt funds stood at Rs 3,668.6 crore, with the liquid fund recording the highest inflow of Rs 34,276 crore and the overnight fund registering the highest outflow of Rs 31,928 crore.
Overall net inflows recorded by the industry stood at Rs 13,263.6 crore for the month. Venkatesh said the upcoming Budget will likely bring cheer to the market, which will clear the path to more inflows in various schemes. However, he said, debt schemes will stabilise once the rate hike cycle stabilises.
“The reduction in equity MF flows could be attributed to a bit of profit-booking in the large-cap segment, as the markets surged in November. Given the correction in mid- and small-caps over the last year, investors have been steadily allocating their money towards this segment, possibly viewing it as a good investment opportunity. Index funds and ETFs have been witnessing steady inflows, which could mean investors are moving to passive funds, as opposed to active funds, in the large-cap segment,” added Santarita.