The Indian mutual fund industry experienced a significant surge in equity-oriented mutual fund inflows from June to October 2023, particularly in small-cap, thematic, and sectoral funds. According to AMFI data, equity-oriented mutual fund inflows rose from Rs 8,637 crore in June to Rs 7,625.95 crore in July, further doubling to Rs 20,245.26 crore in August. Thematic and sectoral funds led the charge with the highest inflows at Rs 4,805.81 crore, followed by small cap funds with Rs 4,264.82 crore.
October 2023 marked a substantial surge in net investments into actively managed equity schemes by 42%, totaling Rs 19,957 crore. This was the 32nd consecutive month of net inflows across all equity categories. Small cap funds attracted the highest investment of ₹4,495 crore, followed by thematic and multi-cap funds at ₹3,896 crore and ₹2,911 crore respectively. New fund offers saw a collection of ₹3,638 crore in October compared to September's ₹7,795 crore.
Despite foreign investors selling equities worth 245.48 billion rupees due to elevated U.S. Treasury yields and the Nifty 50 experiencing its worst performance for the year with a nearly 3% drop, this trend persisted. G. Pradeepkumar underscored this surge in equity fund inflows across all categories in October 2023 while also noting a 15% reduction in redemptions.
Small-cap fund inflows rose by 1.67 times to hit Rs 4,495.1 crore while large-cap schemes saw an inflow of Rs 723.8 crore - a turnaround from the September outflow of Rs 110.6 crore and marking renewed investor faith after six months of outflows according to Pradeepkumar. Investors leaned towards small- and mid-cap funds with small-caps drawing in six times more than large-caps at 44.95 billion rupees, mid-caps attracting 24.09 billion rupees, and small-cap funds' AAUM exceeding ₹2 lakh crore for the first time as confirmed by Anand Vardarajan.
The mutual fund industry managed to attract four crore unique investors with Systematic Investment Plan (SIP) accounts increasing to 7.13 crore. The number of new SIP accounts opened in 2023 reached a record high of over 35 lakh, with contributions reaching a record-breaking total of Rs 169.28 billion. Inflows into SIPs hit a record high with an inflow of ₹16,928 crore against the previous month's ₹16,042 crore.
Despite a decrease in equity mutual fund inflows to Rs 14,091.26 crore in September from August's high, inflows rebounded to nearly Rs 20,000 crores in October thanks primarily to retail investors' contributions.
In contrast to the buoyant equity segment, inflows into long-term debt funds remained negligible due to the government's withdrawal of indexation benefits earlier in the year, and there were outflows from liquid funds. However, debt schemes saw a positive shift with inflows of ₹42,634 crore in October after two consecutive months of outflows as noted by Anand Vardarajan. Corporate bond funds witnessed an influx of ₹1,940 crore in October.
Melvyn Santarita emphasized a four-fold increase in Gold ETFs to ₹841 crore due to geopolitical tensions and economic factors, reinforcing gold's position as a safe haven for investors.
The mutual fund industry's assets under management stood at an impressive Rs 46.72 lakh crore in October, up from Rs 46.58 trillion at September-end. Mid-cap funds recorded inflows of Rs 2,408.9 crore against a net investment of Rs 2,000.9 crore in September.
NS Venkatesh, the CEO of Association of Mutual Funds in India (AMFI), expressed optimism about future economic growth and corporate earnings. He expects equity fund flows to continue their upward trajectory.
From the onset of this financial year until October, Mumbai's MF sector has seen escalating SIP investments, setting new records each month and accumulating to Rs 1 lakh crore for the year, culminating at Rs 1.08 lakh crore by October. Motilal Oswal AMC's Akhil Chaturvedi ascribes this to a rise in investor maturity, leading to Rs 8.59 lakh crore in SIP assets under management in October.
The mutual fund industry overall witnessed an inflow of Rs 80,528 crore in October, a stark contrast to the outflow of Rs 66,192 in September. This helped nudge the MF industry's total assets under management up by around 0.3% to Rs 46.72 lakh crore at the end of October. Smallcap funds took the lead among equity schemes with the highest inflows at Rs 4,495 crore, marking a recovery from a slower September. Largecap funds also saw a positive shift with net inflows of Rs 724 crore in October, reversing the outflow trend seen in September.
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