Open-ended equity mutual funds saw a decline in inflows for the third consecutive month in August 6,119.58 crore, as investors continued to withdraw money due to rising interest rates and sticky inflation.
Despite the fall, net inflows into equity funds remained in positive territory for the 18th month. Equity funds see inflow in July 8,898 crore, 15,498 crore in June, 18,529 crore in May and 15,890 crore in April.
Retail participation through Systematic Investment Plans (SIPs) remained strong despite market volatility.
Data from the Association of Mutual Funds in India (Amfi) on Friday showed that the monthly SIP contribution in August was 12,693.45 crore, an all-time high. The number of SIP accounts also hit a record high of 57.1 million in August, up from 56.1 million in June. “Monthly SIP, SIP AUM, SIP folio, overall mutual fund folio, AUM, are at an all-time high, coupled with continued positive inflows across most categories of mutual fund schemes, reflecting the increasing informed investment preference for mutual fund asset classes. NS Venkatesh, Chief Executive, Amphi said.
Flexi-cap funds see significant inflows 2,099 crore, followed by mid-cap and small-cap funds.
In the hybrid category, excluding arbitrage funds, five remaining schemes, which include Dynamic Asset Allocation, Balanced Advantage Fund, Balanced Hybrid and Aggressive Hybrid Fund, saw positive inflows. Priya Agarwal, Money Coach, LXME said, “Investors have taken a cautious approach this month and due to rising interest rate scenario, money is temporarily shifting from equity to debt.
Net inflow of Debt Mutual Funds seen 49,164 crore, led by Liquid Fund 50,095 crore. However, overnight, floaters, and outflows in banking and PSU funds were observed 16,405 crore, 2,285 crore and 1,380 crores respectively.
Net flow of overflow seen in mutual fund industry due to strong demand in debt market 65,000 crore in August. As a result, the net assets of the industry under management reached an all-time high. 39.33 trillion, up 7% over the previous year.
Given the northward movement of the rate hike cycle, most investors opted to stay invested in short-term funds. “Investors are putting their money in short-term debt instruments, against long-term instruments, for a variety of reasons. Given that interest rates are on an upward trend, investors prefer to park their money in these short-term instruments, given that they are more likely to earn higher interest rates than other traditional assets such as fixed deposits. said analyst Kavita Krishnan, manager research, Morningstar India.
Net outflows of gold exchange-traded funds (ETFs) continued, according to data 38.14 crore, while other ETFs saw inflows 7,416.46 crores. In August also, the number of folios with gold ETFs declined to 4.61 million from 4.64 million in July. “Since higher interest rates affected gold prices, investors preferred to invest their money in equities and short-term debt instead of gold. This trend has also been observed globally,” Krishnan said.
catch all Mutual Fund News And updates on Live Mint. download mint news app To get daily market updates & Live business News,