Equity fuels MF inflows in Dec; debt sees ₹75,559.93 cr outflows
While equity schemes attracted investor inflows, debt witnessed outflows to the tune of ₹75,559.93 crore, thanks to advance tax requirements by corporates. Liquid schemes witnessed the most outflows at ₹39,675.27 crore. In equity, however, investors continued to show preference for small caps worth these funds witnessing incremental net inflows of 4.3% m-o-m to ₹3,857.50 crore, even as large caps witnessed outflows and midcap fund inflows moderated sharply.
Large-cap funds posted net outflows of ₹280.94 crore in December, marking a reversal from the positive inflows seen in the previous two months. Mid-cap funds also suffered, with inflows dropping 47.7% m-o-m to ₹1,393.05 crore.
Citing the AUC crossing the ₹50-trillion mark, Navneet Munot, chairman of AMFI, said, “The MF industry is geared up for the next growth milestone of ₹100 trillion AUM and 100 million investors, which we are sure will be achieved sooner than expected as the industry has shifted gears to accelerate distribution outreach leveraging technology across the value chain.”
“The monthly gross SIP inflow, which was around ₹8,000 crore in FY20, has now scaled up to an all-time high of ₹17,610 crore in December 2023 with cumulative inflows through SIPs alone crossing ₹1.41 trillion. The SIP AUM as at the end of December 2023 touched ₹10 trillion, which is another significant milestone,” AMFI said.
“In December 23, MFs garnered active equity inflows of ₹215 billion (+8.7% m-o-m). SIP inflows remained stable at ₹176 billion (-0.5% m-o-m), and lumpsum equity contribution improved to ₹39 billion (+84.9% m-o-m). For FY24TD, continued SIP inflows drove active equity net inflows to ₹1.44 trillion (+28.8 year-on-year). Strong MTM (Nifty +7.9% m-o-m) and SIP flows propelled active equity AUM to an all-time high of ₹27.5 trillion (+6.8% m-o-m) while total industry AUM was at an all-time high of ₹50.78 trillion,” according to the Nuvama Institutional Equities report.
Equity inflows jumped 9.4% month-on-month to ₹16,997 crore in December, compared to ₹15,536 crore in November. While this marks a dip from October’s high of ₹19,957 crore, according to data from the Association of Mutual Funds in India (AMFI).
Looking at specific fund categories, “Both the mid-cap and the small-cap indexes have seen a sharp rally over the last six months and one year. Consequently, investors have also flocked to these categories with ever-increasing flows. Investors should note that while both the midcap and the small-cap categories have the potential to deliver good returns, these categories inherently are volatile with sharp drawdown risks. Therefore, investors should have a long-term time horizon while investing in these categories. Opting to invest in these categories via the SIP route is a good way by which investors can ride the volatility whilst dollar cost averaging over long periods,” said Melvyn Santarita, Analyst – Manager Research, Morningstar Investment Research India Pvt Ltd.
However, debt inflows plummeted for the second consecutive month, sinking to a negative ₹75,560 crore in December from ₹42,633 crore in October.
“The huge net outflow in December could be attributed to the advance tax requirement that corporates need to meet with it being the quarter net inflows, net outflows
end. Expectedly, liquid funds witnessed the highest net outflows during the month,” said Santarita.
“The net flows into equity funds have increased in December indicating sustained investor interest in equity mutual funds. SIP numbers also remained robust at more than ₹17,000 crore for the second consecutive month. With the expectations of high economic growth and political continuity, investors appear to be becoming increasingly confident about the prospects of Indian equity market. At the same time, given the higher spreads on the arbitrage side and the equity taxation, the flows into arbitrage funds also remained high. The tighter liquidity conditions probably led to higher outflows from the short-term debt funds such as the liquid funds,” said G. Pradeepkumar, CEO, Union Asset Management Company Pvt Ltd.
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Published: 08 Jan 2024, 07:13 PM IST
