Equity fund inflows hit record high of Rs 41,887 cr in Oct despite weak markets: AMFI

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Open-ended equity mutual fund inflows surged 21.69 percent on a month-on-month (MoM) basis to Rs 41,887 crore in October across the equity fund segment, data released by the Association of Mutual Funds of India (AMFI), the industry trade body for mutual funds, showed on November 11.

Inflows into open-ended equity funds stayed in the positive zone for the 44th month in a row.

AMFI data also showed that investments into mutual funds via monthly systematic investment plans (SIPs) stood at Rs 25,322 crore in October, an all-time high against Rs 24,509 crore in September.

The rise in equity fund inflows came amid weak performance by equity markets last month. Both the Sensex and the Nifty were down 5.77 percent and 6.22 percent in October.

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Demand for small-cap, mid-cap and large-cap funds stayed strong as all three categories saw good inflows during the month.

“The month shows investors have preferred hybrid funds due to the ongoing volatility in the equity markets. We are positive on the Indian economy and India's equity market will deliver a reasonably good return while comparing with other emerging markets. Trump presidency in US is broadly positive for us. We believe that the market is volatile due to short terms factors like weak domestic earning cycle, delayed government spending for capital intensive sectors etc. However, investors should continue investing in equity mutual funds with 3-5 years’ time horizon,” said Hitesh Thakkar, Acting CEO, ITI Mutual Fund.

In the equity fund category, inflows into large-cap funds nearly doubled to Rs 3,452 crore. Further, net investments into Mid Cap Funds zoomed 50 percent to 4,683 crore and Small Cap Fund saw 23 percent jump in inflow to Rs 3,772 crore.

Inflows into Sectoral/Thematic Funds dipped 7 percent but stayed strong at Rs 12,279 crore during October. Four new fund offers in the Sectoral/Thematic category collected Rs 3,517 crore during the month.

In the fixed-income category, debt mutual funds saw inflows of Rs 1,57,402.30 crore. Short-duration Liquid Fund Fund category saw the highest inflows at Rs 83,863 crore during the month. It was followed by Overnight Funds and Money Market Fund, which saw net investments to the tune of Rs 25,303 crore and Rs 25,303 crore, respectively.

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“In recent months, anticipation of a rate cut has fueled interest in active duration strategies, with these funds positioned to benefit from potential interest rate declines. In October, gilt funds attracted inflows of Rs 1,375.57 crore, while long-duration bonds saw Rs 1,117.47 crore. Inflows into these funds are expected to rise further once the rate easing cycle begins,” said Nehal Meshram, Senior Analyst – Manager Research, Morningstar Investment Research India.

On the other hand, small outflows were seen in Credit Risk Fund and Medium Duration Fund categories.

In other schemes category, Index funds saw inflows of Rs 7,931 crore and Gold ETFs (Exchange-Traded Funds) witnessed net investments of Rs 1,962 crore.

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Overall, open-ended mutual funds saw net outflows worth Rs 2,39,906.79 crore during October.

Akhil Chaturvedi, Executive Director & Chief Business Officer, Motilal Oswal AMC, said, “The equity inflows continue to be stable around Rs 40 crore net sales on monthly basis. The flows apart from NFO which were healthy at Rs 15,000 crore is also diversified across market-cap buckets. We have seen heightened volatility in markets with FII selling due to major global events including USA elections. The healthy net flows is a testimonial to the resilience amongst domestic investors to continue investing in equities despite market volatility.”