September net equity inflow at Rs 13,857 crore; holds positive territory for 31st month in a row

In September, data released by the Association of Mutual Funds in India (AMFI) revealed that inflows into open-ended equity mutual funds amounted to Rs 13,857 crore. This marked a decrease from the previous month, which saw inflows of Rs 20,161 crore. Despite this monthly decrease, it’s noteworthy that net inflows into equity funds have remained in positive territory for the 31st consecutive month, starting from March 2021.

These inflows occurred against the backdrop of volatile equity markets in September. Despite the market’s volatility, the BSE Sensex saw a net gain of 1.50 percent during the month, while the NSE Nifty registered a gain of 2 percent. The fact that investors continued to allocate funds to equity mutual funds during a month with market fluctuations underscores their confidence in long-term investing and the potential for growth in the equity markets.

In September, there was a rise in the inflow of funds into hybrid funds, with the total inflow reaching Rs 18,650 crore. This was an increase compared to the previous month, which saw inflows of Rs 17,082 crore.

On the other hand, liquid funds continued to experience outflows, with Rs 74,177 crore leaving the funds in September. This represented a significant increase in outflows compared to the previous month when Rs 26,824 crore was withdrawn from liquid funds.

The Total Assets Under Management (AUM) in the mutual fund industry stood at Rs 46.58 lakh crore in September, slightly lower than the AUM of Rs 46.63 lakh crore in August.

Additionally, it’s worth noting that the outflows from Equity-Linked Savings Schemes (ELSS) widened to Rs 141 crore in September, in contrast to the Rs 27 crore outflows in the previous month. ELSS is a category of equity mutual funds that offer tax benefits to investors, and the change in outflows may reflect shifting investor sentiment and tax planning.

These figures provide insights into investor behavior and fund flows within the Indian mutual fund industry, indicating the trends and preferences among investors during the given period.

In September, small-cap funds continued to receive inflows, with investors contributing Rs 2,678 crore to these funds. While this inflow was lower than the previous month, when small-cap funds received Rs 4,265 crore, it suggests that investors are still interested in this category.

Conversely, large-cap funds faced outflows of Rs 111 crore in September, although this outflow was narrower than the Rs 349 crore outflow observed in August. It appears that some investors may be reallocating their investments within different segments of the market.

Corporate bond funds experienced outflows of Rs 2,460 crore in September, in contrast to the inflows of Rs 1,755 crore in August. This change indicates a shift in investor sentiment or preferences within the fixed-income category.

It’s worth noting that in August, equity mutual funds saw a substantial 165 percent increase in inflows, amounting to Rs 20,245 crore. This surge in inflows was primarily driven by strong demand for small-cap and sectoral funds.

These trends in fund flows reflect investors’ varying preferences and risk appetites as they navigate the mutual fund landscape in response to changing market conditions and economic factors.

In August, large-cap funds experienced ongoing outflows, which can be attributed to a decline in benchmark indices during that month. This suggests that investors may have been realigning their portfolios due to market conditions and their perceptions of risk and return in the large-cap segment.

On the other hand, small-cap funds continued to attract investor interest, maintaining inflows above the Rs 4,000 crore mark for the third consecutive month in August. This trend indicates a continued appetite for smaller companies and potentially higher-growth opportunities.

In the fixed-income space, there was a notable shift from net inflows to net outflows in debt-oriented schemes. After experiencing net inflows of Rs 61,400 crore in July, debt-oriented schemes saw net outflows amounting to Rs 25,873 crore in August. This change may be reflective of evolving economic conditions and interest rate expectations, as well as individual investors’ preferences regarding fixed-income investments.

The trends in fund flows highlight the dynamic nature of the mutual fund industry, where investors adapt their strategies in response to market fluctuations and evolving economic factors.