Inflows into equity schemes fall 34% MoM in October | The Financial Express

Inflows into equity schemes fall 34% MoM in October

November witnessed another rate hike by the US Federal Reserve in an attempt to bring inflation under control. Expectations around a global slowdown likely led to foreign investors remaining net sellers during October.

Inflows into equity schemes fall 34% MoM in October
They see SIP as wealth accumulation and wealth creation over a longer term.

Inflows into equity mutual fund schemes declined in October, in a month the benchmark indices gained over 5%. Inflows stood at Rs 9,309 crore, 34% lower than Rs 14,099 crore in the previous month and 38% lower than the average for the year, data released by the Association of Mutual Funds of India (AMFI) show.

Equity schemes have now seen inflows for 20 consecutive months.

Within the equity-oriented category, most inflows were seen in sectoral/ thematic funds (Rs 2,686 crore), followed by smallcap funds (Rs 1,581 crore), midcap funds (Rs 1,385 crore) and large & small cap funds (Rs 1,189 crore).

A total of 31 schemes were launched, out of which 28 schemes are open ended and three are close-ended. These were introduced under various categories with total funds mobilisation to the tune of Rs 5,439 crore.

NS Venkatesh, chief executive, AMFI, said: “Markets continue to react to  global factors and domestic rate hikes. However, mutual fund investors have shown resilience and continue to invest in SIPs with consistent contribution month on month. There is growth in overall equity AUM and folios too.”

Also Read: Best Small Cap Mutual Funds (Nov 2022): Top 10 Equity/Growth schemes with highest returns since launch

In the last few months, markets reacted to inflationary factors and events like rate hikes. However, small investors have shown consistent faith in mutual fund investments. They see SIP as wealth accumulation and wealth creation over a longer term.

November witnessed another rate hike by the US Federal Reserve in an attempt to bring inflation under control. Expectations around a global slowdown likely led to foreign investors remaining net sellers during October.

“A reasonable risk appetite continues among investors, with 50% of total new folio additions in mid and small cap schemes, and only 9% in large cap. About one third of equity net inflows came into midcap and smallcap schemes and only 2% in large cap. Sectoral/thematic schemes continue to garner inflows (29% of net inflows) and folio additions,” said Kislay Upadhyay, manager and founder of  FidelFolio Investments.

“We expect this to be positive for midcap quality stocks. Quarterly results show midcap quality companies are growing their top lines faster than larger ones, and quality franchises are able to pass on inflation costs, supporting profit growth,” Upadhyay said.

SIP contribution grew 0.5% MoM to Rs 13,040 crore in October, the highest ever. The number of SIP accounts stood at 5.93 crore. Mutual fund folios and retail MF folios were all-time high at 13.9 crore and 11.1 crore, respectively.

“Trend in SIP contribution and folios is positive, reflecting faith of the investors in the Indian economy and markets. It also re-affirms the trend of financialisation of household savings even in the face of persistent concerns on the global macro front. Indian economy’s resilience during these troubled times globally is also helping. However, to really gauge retail investors’ sentiment, we would need to closely watch the 12% dip in the number of new SIPs registered in October, compared to the average of last two months,” said Akhil Chaturvedi, chief business officer, Motilal Oswal Asset Management.

In the hybrid fund category, arbitrage funds – which aim to generate profits by exploiting price differences of the same underlying assets in different segments – saw net outflows of over Rs 2,470 crore. The hybrid category saw total outflows of Rs 2,819 crore.

Debt-oriented funds witnessed net outflows of over Rs 2,817 crore in October, compared with an outflow of Rs 65,000 crore in September. Liquid funds saw inflows of over Rs 19,000 crore in this category. Most other debt categories saw outflows, with overnight funds seeing outflows of over Rs 7,000 crore.

Net AUM of the industry stood at Rs 39.5 trillion as on October 31, 2022,  2.8% higher than September.

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First published on: 11-11-2022 at 01:15 IST