Market crash impact? Investors pump more money into mutual funds; Small Cap, Thematic schemes shine

AMFI February 2023 Data: As markets remain volatile, retail investors seem to be getting more interested in mutual funds.

AMFI February 2023 data
Check details of latest AMFI data.

AMFI February 2023 Data: As markets remain volatile, retail investors seem to be getting more interested in mutual funds, which are considered safer than investing directly in company stocks. The latest data from the Association of Mutual Funds in India (AMFI) for February 2023, shows that net inflow in equity/growth-oriented schemes increased by around 25% last compared to January 2023.

The stock markets witnessed one of the worst one-day falls of 2023 on February 22nd. Even today, the BSE Sensex was down over 670 points at the time of writing while the Nifty50 was down over 176 points.

The net flow in equity mutual fund schemes in February was around Rs 15,685 crore, compared to Rs 12,546 crore in January. Of the 11 categories of mutual funds in February, Sectoral/Thematic funds witnessed the highest net flow of Rs 3855.90 crore. It was followed by Small Cap Funds (Rs 2246 crore), Multi Cap Funds (Rs 1977 crore), Mid Cap Funds (Rs 1816 crore), Flexi Cap Funds (Rs 1802 crore) and Large & Midcap Funds (Rs 1651 crore).

Also Read: How stock market crash impacts Mutual Fund investors: Golden lessons from past

“Investors remain cautious in investing in equity while stock markets remain volatile in February 2023. Further, we have seen that investors are basically holding on investing a lump sum in equities and looking for markets to stabilise and then take a call on the Indian equity market,” Lallit Tripathi, Chairman and MD at Vedant Asset said.

“Investors are opting for debt funds as a safer bet for investing amidst the volatility in equities. Debt funds which is a better option where we are seeing almost the last leg of the rate hike cycle making debt funds, especially bond funds a better opportunity to invest in,” he added.

In February, SIP contributions totalled nearly 14,000 Crores as per AMFI data. Commenting on the increase in SIP inflows in February, Harsh Gahlaut, CEO, FinEdge said this is a very positive sign for the industry and may signal that the retail investor base is starting to mature.

“What is most impressive is that small & mid cap funds witnessed inflows of more than Rs. 2,800 Crores despite the ongoing market volatility. Over the long run, these funds have tremendous potential to create wealth through long-term compounding but remaining invested has traditionally been difficult for retail investors. We are optimistic that this is the start of a trend wherein retail investors are able to maximize returns from small and mid-cap funds for their long-term goals,” said Gahlaut.

Also Read: AMFI January 2023 Data

Index Fund flows grow

While debt funds witnessed an outflow amid rising interest rates, the index fund flows increased to Rs 6244 crore in February from Rs 5813 crore in January.

“Barring Dividend yield funds (Rs.48 crore), focused funds (Rs.240 crore) and large-cap funds (Rs.354 crore), the rest eight categories saw net inflows greater than Rs.700 crore each. Index funds continue to gain investor allocation with a total flow of Rs.6244 crore,” said Gopal Kavalireddi, Head of Research at FYERS.

“With interest rates expected to rise from current levels, debt funds witness continued outflows as investors churn their allocation between short and long-term funds. Liquid funds outflows were the highest at Rs.11,304 crore, followed by Ultra short duration funds at Rs.2430 crore and Low duration funds at Rs.1904 crore,” he added.

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First published on: 10-03-2023 at 16:30 IST
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