Five key highlights from AMFI’s June numbers

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Equity mutual funds continue to attract record flows even as the markets hover around record levels. The latest set of data from the Association of Mutual Funds in India (AMFI), the industry body of mutual fund companies, shows that the cumulative average assets under management (AAUM) for the month of June surpassed the Rs 60 lakh crore mark with the equity AUM nearing the Rs 27 lakh crore mark.

Here are some of the key highlights from the industry numbers from the month of June.

Equity scheme flows increase 17 percent MoM
Equity mutual fund schemes saw the highest ever monthly inflows of Rs 40,608 crore in the month of June. The latest numbers, Nirav Karkera, Head of Research at Fisdom says, shows a changing trend among investors. “With the election overhang out of the way, retail investors have clearly doubled down on equity investments. The same is corroborated by a robust SIP book,” he says.

SIP flows cross Rs 21,000 crore mark
Systematic investment plan (SIP), which has emerged as one of the most popular investment routes for the retail investor, saw flows touching an all-time high of Rs 21,262 crore in June. Further, the SIP AUM share was pegged at around 20 percent of the overall industry AUM with the number of SIP accounts totalling 8.99 crore.

Deepak Ramaraju, Senior Fund Manager at Shriram AMC, believes that the increase in SIP flows is just the beginning as investors today are relatively better informed about the markets.

“The SIP route (also) is the best way to stagger the investment for the long term when the markets are trading at excessive valuations and the investors can average out their investments during the volatile phase,” he adds.

Going ahead, if there are restrictions introduced in the F&O space for retail investors, then it could lead to such investors increasing their allocation to SIP or even look at lumpsum investments.

Sectoral/thematic funds shine

For a straight second month, thematic funds saw increased inflows. The category has received the highest inflows within the equity-oriented mutual fund categories for the past six months.

According to AMFI, this category saw nine NFOs in the month of June, garnering more than 50 percent of the equity-oriented mutual fund category inflows at Rs 12,974 crore. Abhishek Tiwari of PGIM (India) MF notes that there are new opportunities emerging as the market is expanding with newer listings.

“Investors need to time their entry and exit well in thematic/sector funds. Not all sectors will do well every year. Hence, they are meant for investors who can keep a tab on sector rotation,” he says.

Passive fund AUM touches Rs 10 lakh crore

Passive funds recorded the highest month-on-month increase with asset gains of Rs 64,554 crore, during the month, to hit an all-time high of Rs 10.48 lakh crore.

“Retail investors who are more informed on the cost of the funds will prefer to stick to passive funds. This segment will continue to grow as the institutional investments are seeing more flows incrementally and they prefer low-cost funds predominantly in the large cap category,” says Ramaraju.

Meanwhile, Gold ETFs, which saw a decline last month, grew 8.4 percent reaching Rs 34,356 crore. According to AMFI, Gold ETFs have seen the highest growth over the past year -- up 54 percent, while index funds were the second highest at 39 percent.

Large Cap Funds regain momentum

In June, large-cap funds recorded an inflow of Rs 970 crore compared to an inflow of Rs 700 crore in the previous month. On the other hand, midcap schemes saw an inflow of Rs 2,528 crore versus Rs 2,600 crore in May, while small-cap schemes witnessed an inflow of Rs 2,263 crore against Rs 2,700 crore in May.

Karkera noted that concerns around mid and small cap valuations loom large especially against the backdrop of a meteoric rise within a relatively shorter period in time.

“With large caps offering a relatively reasonable valuation proposition, investor interest is indeed shifting towards large cap stocks. Expectations of foreign inflows and hopes of a quicker uptick in large cap prices has supported this shift further," he noted.

Another segment to see increased inflows has been the multi cap schemes. In June, Multi Cap funds saw inflows of Rs 4708.57 crore, much higher than Rs 2,600 crore a month prior. According to Nuvama analysts, the big jump is due to Motilal Oswal Multi Cap Fund NFO, which garnered over Rs 1,000 crore during the month.

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