Assets of MF industry top Rs 65 lakh crore for first time, equity funds see Rs 38,239 crore inflows in August

During August, NSE benchmark Nifty 50 rose 1.14 percent, while BSE headline index Sensex inched up 0.76 percent.

Open-ended equity mutual fund inflows rose 3.03 percent to Rs 38,239.16 crore during August on heavy demand for small-cap and mid-cap funds, according to the data released by the Association of Mutual Funds of India (AMFI), the industry trade body for mutual funds on September 10.

Notably, net assets under management (AUM) of the mutual fund industry rose to hit the Rs 65 lakh crore level for the first time in August, data showed. The net AUM at the end of month stood at Rs 66.70 lakh crore.

Meanwhile, inflows into open-ended equity funds have remained in the positive zone for the 42nd month in a row.

The investments via systematic investment plans (SIPs) continued to set fresh highs as monthly contributions via SIPs hit Rs 23,547 crore in August against Rs 23,332 crore in the previous month.

Equity funds

The rise in equity inflows during August came amid tepid equity markets. During the month, the NSE benchmark Nifty 50 rose 1.14 percent, while the BSE headline index Sensex inched up 0.76 percent.

Despite this, inflows into small-cap funds jumped 52 percent to Rs 3,209.33 crore. Further, net investments into mid-cap funds zoomed 86 percent to Rs 3,054.68 crore.

Large-cap category saw net inflows of Rs 2,636.86 crore during August, a jump of 293 percent over the previous month.

On the other hand, inflows into multi-cap funds, which invests across large-cap, small-cap and mid-cap stocks, slumped 65 percent to Rs 2,475.06 crore.

Manish Mehta, National Head - Sales, Marketing & Digital Business, Kotak Mahindra AMC on AMFI numbers, said, “Net flows continue to remain encouraging with SIP and NFO inflows. Sectoral or thematic category of schemes witnessed strong inflows due to NFO. NFO’s seem to be the preferred route for investors to take a lump sum allocation to mutual funds since schemes can invest over a stipulated period.”

Inflows into thematic/sectoral funds remained robust at Rs 18,117.18 crore during August. The inflows into thematic/sectoral funds were fuelled by new fund offers (NFOs) as five new funds in the category collected Rs 10,202 crore during the month.

Debt funds

In the fixed-income category, debt mutual funds saw net inflows of Rs 45,169.36 crore during August. During July, debt funds saw net inflows of Rs 1,19,588 crore.

Ultra Short Duration Fund category saw 92 percent dip in inflows at Rs 695.62 crore, while outflows in Banking and PSU Fund category rose to Rs 1,549.99 crore. Short duration Liquid Fund category also saw 81 percent slump in inflows at Rs 13,594.87 crore.

On the other hand, overnight funds saw 239 percent jump in inflows at Rs 15,105.93 crore, while Gilt fund saw 51 percent jump in inflows at Rs 1,902.09 crore.

"Investor interest in active duration strategies has driven notable inflows, particularly into categories such as Gilt Funds, Gilt Funds with a 10-year constant duration, Dynamic Bond Funds, Medium to Long Duration, and Long Duration Funds. These funds stand to benefit if interest rates decline, and inflows could increase as the outlook on rate cuts becomes clearer. Gilt funds have already seen significant inflows over the past two months, with Rs 1,902.09 crore in the current month, up from Rs 1,261.63 crore last month," said Nehal Meshram – Senior Analyst – Research – Morningstar Investment Research India.

Hybrid funds

Inflows into the hybrid fund category, which invests in more than one asset class, slumped 43 percent to Rs 10,005.30 crore in August.

Flows were restricted by 78 percent slump in arbitrage funds at Rs 2,372.13 crore. Further, Multi Asset Allocation Fund category saw 10 percent dip in inflows to Rs 2,826.89 crore. Further, Conservative Hybrid Fund saw small outflows to the tune of Rs 186.84 crore.

On the other hand, the Dynamic Asset Allocation/Balanced Advantage Fund category saw 79 percent in inflows to Rs 3,215.06 crore.

Other schemes

Among passive funds, index funds saw 60 percent dip in net inflows to Rs 3,247.24 crore during August.

On the other hand, gold exchange-traded funds saw net inflows of Rs 1,611.38 crore, a jump of 20 percent over the previous month.

Meanwhile, the fund of funds investing overseas category saw net outflows of Rs 352.83 crore during the month.

Overall, open-ended mutual funds saw net inflows of Rs 1,08,240.95 crore during August.