Equity mutual funds inflows reduced in October 2022 while the number of new SIP folios also dipped nearly 12%, according to the latest data from the Association of Mutual Funds in India (AMFI). (Also read: AMFI November data)
The data shows that investors continue to shun hybrid schemes, which witnessed net outflows of Rs 2819 crore in October. This is the fifth straight month of negative flows in hybrid funds. However, net inflows in Sectoral/Thematic, Midcap, Smallcap, Large &Midcap mutual fund schemes were greater than Rs 1000 crore in October.
Among all equity schemes, net inflow was highest in Sectoral/Thematic funds at Rs 2686 crore. Flows in Large & Midcap, Smallcap and Midcap funds were Rs 1189.87 crore, Rs 1581.91 crore and Rs 1385.33 crore respectively.
The net inflow in all equity mutual funds in October was Rs 9390.35 crore.
Also Read: AMFI September 2022 data
“Mutual fund data for the month of October 2022 indicates a net inflow of Rs.14,047 crore as compared to the net outflow of Rs.41,404 crore last month, mainly due to lower outflows from debt schemes. Higher inflows of Rs.19,084 crore into liquid funds was the bright spot in the debt category, as investors continued their redemption from various duration funds on account of rising interest rates. Overnight, floater funds including Banking & PSU funds had large outflows,” said Gopal Kavalireddi, Head of Research at FYERS.
“With the Indian stock markets exhibiting price and time consolidation all through the year, investors opted for index funds and the ETF route. Index fund net flows were Rs.5,075 crore, and other ETFs recorded Rs.4,845 crore of net flows. The other schemes category saw positive inflows in all 10 months of this calendar year, with Rs.139,237 crore of net flows,” he added.
SIP remains strong
“Equity mutual fund inflows, while lower than last month, continue to remain strong and supported by a robust SIP book and recent NFOs. On the debt side, target maturity funds remain popular with several new launches and continue to attract inflows,” Arun Kumar, Head of Research, FundsIndia.
“Trend in SIP contribution and folios are 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 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 number of new SIP’s registered in Oct compared to average of last two months,” said Akhil Chaturvedi, Chief Business Officer, Motilal Oswal Asset Management Company.
Also Read: AMFI August 2022 data
What should investors do?
Experts say that volatility should be expected regularly as the world still is grappling with multiple macroeconomic issues as well as geopolitical concerns.
“A balanced approach in investing is highly recommended, with focus on profit growth and valuations,” Rahul Veera, smallcase manager & Fund manager – RIA at Abakkus Asset Manager LLP, said.
“The domestic fundamentals remain good, with second-quarter corporate earnings coming in line with market expectations and various indicators showing improvement in economic activity. It makes sense for an investor to build their equity portfolios by taking advantage of market volatility,” said Shweta Rajani, Head – Mutual Funds, Anand Rathi Wealth Limited on AMFI data.
(Mutual Fund investments are subject to market risks. Please consult your financial advisor before making any investment decision)