Net inflows during June at ₹8,244.80 crore improved 184% over ₹2,906.39 crore in May, showed data from the Association of Mutual Funds in India (Amfi). Net inflows are being driven by strong inflows in smallcap funds and supported by midcap funds, although profit booking continues in large cap funds.
The net outflows in large cap funds at ₹2,049.61 crore in June were much higher than ₹1,362 crore outflows seen in May. Nevertheless, the smallcap funds saw a 67% jump in net inflows to ₹5,471.75 crore and mid cap funds supported with net inflows rising 46% to ₹1,748.51 crore.
Akhil Chaturvedi, chief business officer, Motilal Oswal AMC said, “All in all, markets continue to remain buoyant and investors continue to remain attracted to equity as an asset class.”
Analysts at Jefferies India Pvt Ltd also attributed the rise in equity inflows to new fund offers (NFOs), in addition to a strong rise in mid and smallcap flows. The mutual fund sector raised ₹3,228 crore in NFOs versus around ₹200 crore in May. Redemptions typically take place when the market rallies (4% MTM gain) and shows better investor behaviour, they said.
Sriram BKR, senior investment strategist at Geojit Financial Services, said NFO sales of ₹3,228 crore were 11% lower than the three-month average but much higher than the previous month across 11 schemes. About 94% of flows were from five equity funds and the rest from other categories.
There was a dip in the overall mutual fund flows with June seeing a net outflow of ₹2,205 crore in comparison to an inflow of ₹57,420 crore in May.
DP Singh, chief marketing officer, SBI Mutual Fund, said some investors are booking profits at these levels and although fresh money is also being invested, net flows are negative.
“Gross flows are encouraging and likely to improve,” said Singh.
Liquid funds and ultra-short-duration funds accounted for more than ₹30,000 crore of outflows, although there was support from money market funds and low-duration funds which saw net flows of ₹10,500 crore. Debt MFs (both open-ended and closed-end schemes) saw net outflows of ₹16,334.54 crore in June, compared to net inflows of ₹44,382.87 crore in May.
The fall in overall mutual fund flows was also on expected lines with June being the quarter-ending month that tends to get impacted by advance tax payments and other liquidity requirements by companies and individuals, said Gopal Kavalireddi, vice-president of research at FYERS.
The SIP contribution stood at ₹14,734.45 crore in June, almost near the highs of ₹14,748.68 crore in May. The SIP assets under management stood at ₹7.93 trillion for June, compared to ₹7.53 trillion for May. Mutual fund folios reached an all-time high of 149.13 million in June, as against 147.37 million in May.
“We are delighted to witness the consistent growth of assets under management (AUM) in the mutual fund industry, reaching one of the highest levels to date,” said NS Venkatesh, chief executive, Amfi.
Venkatesh said it is particularly encouraging to see money flowing into equity schemes, with small-cap inflows at an all-time high. “The impressive performance of corporate earnings further strengthens the case for investing in India,” he said.
Manish Mehta, national head sales, marketing and digital business, Kotak Mahindra Asset Management Co. said, “June net numbers were a tad higher than May. Some profit booking at higher levels to maintain asset allocation is not ruled out but investors continue to keep investing through SIPs and STPs (Systematic Transfer Plans).”
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Updated: 10 Jul 2023, 10:38 PM IST