Retail investors stepped up their mutual fund bets in August, pushing monthly systematic investment plan (SIP) contributions to an all-time high of Rs 32,297 crore, the second record set this year.
The number of SIP-contributing accounts also crossed the 100-million milestone, rising by 1.2 million during the month to 100.2 million. The mutual fund industry’s net assets under management climbed 1.5% to a record Rs 87.08 lakh crore.
Saugata Chatterjee, president and deputy CEO, Nippon India Mutual Fund, said record SIP contributions, coupled with a moderating stoppage ratio, demonstrate the growing investment discipline among Indian investors.
Small-Cap and Mid-Cap Schemes
The retail appetite was particularly strong in the riskier corners of the equity market. Net equity inflows jumped 19% month-on-month, led by record flows into small- and mid-cap funds. Small-cap schemes attracted about Rs 8,000 crore, while mid-cap funds received close to Rs 7,000 crore. Together, the two categories accounted for more than half of total equity inflows during the month.
The surge came despite concerns over valuations and volatility in the broader market.
Chatterjee added that the continued preference for small- and mid-cap funds reflects investors’ desire to participate in opportunities across corporate India. However, given the nature of these segments, disciplined allocation, patience and a longer investment horizon remain important, he said.
Manish Mehta, chief business officer, SBI Mutual Fund, said strong SIP books in the two categories supported the inflows. He also credited the distribution community for handholding investors through a period of market volatility.
Harish Krishnan, CIO-equity, Aditya Birla Sun Life AMC, cautioned investors about the wide dispersion in valuations and underlying fundamentals. Investors should focus on businesses with improving earnings visibility, sustainable competitive advantages and sound balance sheets, he said.
Flexi-cap funds also drew strong interest, attracting more than Rs 5,000 crore during August.
The month also saw a change in AMFI’s fund classification, with the erstwhile sectoral and thematic category split into two. Sectoral funds recorded net outflows of more than Rs 50 crore, while thematic funds attracted Rs 1,766 crore.
Beyond equities, hybrid funds received net inflows of about Rs 10,000 crore. More than 60% of these flows went into arbitrage and multi-asset allocation funds, with each category attracting more than Rs 3,500 crore. Balanced advantage, equity savings and conservative hybrid funds, however, recorded net outflows.
Passive products continued to draw investor money. Equity exchange-traded funds led the pack with inflows of more than Rs 7,230 crore, while equity index funds attracted Rs 2,393 crore.
Precious-metal funds also gained traction. Gold ETFs received Rs 2,597 crore, up 67% from the previous month, while silver ETFs attracted Rs 1,271 crore.
Himanshu Srivastava, principal-manager research, Morningstar Investment Research India, said the acceleration in gold ETF flows coincided with a strong recovery in gold prices during the month, indicating renewed investor preference for the asset class amid persistent macroeconomic and geopolitical uncertainties.
Debt funds, in contrast, recorded net outflows of Rs 8,127 crore, largely due to withdrawals of more than Rs 30,650 crore from overnight schemes. Liquid and money market funds, however, saw substantial inflows.
Chatterjee said flows into liquid, money market and ultra-short-duration categories suggest investors remain selective amid volatility, with a preference for the shorter end of the yield curve and lower duration risk.