The large cap category of mutual funds, which has witnessed five consecutive months of net outflows, finally turned the corner as it garnered Rs 723.8 crore in October, according to data released by the Association of Mutual Funds in India (Amfi). In April, the category had seen Rs 52.6 crore in net inflows.
Equity funds mark 32nd consecutive months of net inflows
Equity-oriented funds continued to witness net inflows in October 2023, marking the 32nd consecutive month of net inflows. The segment witnessed net inflows of Rs 19,957 crore in October 2023, around 41% higher than September 2023 (Rs 14,091 crore).
The equity segment was also aided by 4 new fund launches in October which garnered Rs 2,996 crore. None of the equity categories witnessed net outflows in October.
Among the equity asset class, the small-cap category saw the highest inflows to Rs 4,495 crore during the month.
Hybrid funds continued to show resilience, with arbitrage funds (Rs 5,523 crore) and multi-asset allocation funds (Rs 2,410 crore) leading the way.
“This trend reflects the prevalent risk-off sentiment in the market, with investors seeking to diversify their investments while maintaining a focus on capital protection. Domestic flows continue to prove structural. Interestingly, SIPs now account for a larger part of inflows (vs one-time investment) and are more structural. This provides the market with a lot of strength,” said Akhil Chaturvedi, Chief Business Officer, Motilal Oswal AMC.
Mid-cap receives second-highest net inflows
The Midcap category received its second-highest net flows in terms of quantum over a monthly period- Rs 2,408.9 crore. The same was true for the small-cap category as well which saw its second-highest net inflows in October at Rs 4,495 crore, aided by the launch of a new fund.
Investors can ride the volatility by sticking to SIP route
Passive funds as a category (Index and ETFs) continue to see robust net inflows every month.
Gold ETF inflows rise
The quantum of net flows in Gold ETFs rose to Rs 841 crore in October from Rs 175 crore it received in September. With ongoing geo-political tensions, fear of continued hikes in interest rates in the US, inflation still higher than expectations, and growth rate slowing down, the appeal of Gold as a safe haven and hedge against inflation is expected to continue.
“Gold prices in recent times have come off from its all-time high levels, thereby providing some buying opportunity, particularly after a sharp rally it witnessed since March this year,” said Santarita.
Debt funds witnessed inflows amounting to Rs 42,634 crore in October. In September these funds saw a net outflow of Rs 101,512 crore.
“The substantial inflows in October could be attributed to the increased flows in the liquid fund category,” said Nehal Meshram, Senior Analyst – Manager Research, Morningstar.
Liquid funds saw the highest net inflow of Rs 32,964 crore as against the net outflow of Rs 74,177 crore in September.
In October, all debt categories, except for overnight funds, low-duration funds, medium-duration funds, credit risk funds, and banking & PSU funds, witnessed inflows.
“Investor sentiment towards the Gilt Fund category was favourable during the month as the category witnessed net flows of Rs 2,000 crore. This could be attributed to investors opting to invest in government papers offering attractive yields in anticipation of a change in interest rate cycle in future,” said Meshram.
SIP flows at all-time high
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The number of SIP accounts stood at highest ever at 7,30,02,604 for October 2023 compared to 7,12,93,738 in September 2023 -
The SIP AUM stood at ₹ 8,59,923.86 for October 2023, compared to ₹ 8,70,363.38 crores for September 2023. -
The number of net SIPs added in October 2023 was 17,08,866, which is the highest till date -
Number of new SIPs registered in October 2023 were 34,66,354
“The SIP numbers reflect strong growth in the SIP book and the trust reposed by retail investors in mutual funds as an investment vehicle and SIP as a route to investment into mutual funds. We are confident of reaching Rs 17,000 crore in November,” said Venkatesh.
“The SIP flow increased to all all-time high. This is a structural change of savings habits through SIP and it is in good momentum. Small-cap and mid cap along with thematic & multi-cap and flexi-cap funds find attraction as investors used the correction happened in October as an opportunity to add. Decent corporate earnings also prompted investors to be positive on the market.Arbitrage funds continue to find investors’ interest as spread rollover remains attractive along with tax arbitrage over other short term parking options,” said Mukesh kochar, National Head of Wealth at AUM Capital.