Runs Mid, Smallcap Equity MF. Why invest in Mutual Funds in the current market?

Inflows into equity mutual funds, as per AMFI data 7,303.39 crore in December. Major contribution was from small-caps and mid-caps, which recorded inflows 2,244.77 crore and 1,962.26 crore respectively. flows in november Equity MF was on 2,258.35 crores.

On equity MFs, Gopal Kavalireddy, Head of Research, FYERS said, “With the continued volatility in the stock Market And given the performance gap that has opened up between large-cap funds and small and mid-cap funds, investors are now opting for value play. Smart investors opt for index funds and ETFs to combat volatile markets.”

Meanwhile, Akhil Chaturvedi, Chief Business Officer, Motilal Oswal Asset Management Company said,equity Net inflow of money increased to 7.3k crore in December from 2.2k crore in November. This was led by increased inflows into the mid and small cap categories, which have started looking attractive in terms of valuations after the recent correction. We are also witnessing highest inflows into our midcap fund in line with the overall industry.”

However, debt-oriented schemes posted outflows in December There is an outflow of liquid funds of 21,946.73 crores 13,852 crores. Inflow in this market in November was around Liquid Fund outflows recorded at Rs 3,668.59 crore 34,276.44 crores.

On the other hand, in hybrid schemes Driven by multi-asset allocation fund saw inflow of Rs 2,255.26 crore 1,711.42 crores.

index funds and others ETF recorded an inflow of 6,736.52 crore and 8,788.45 crore in December. while incoming 146.07 crore was recorded in funds investing abroad. Gold ETF market sees rupee withdrawal 273.19 cr. Expansion from outflow of — 194.74 crores in November. Overall in other schemes Rs. flow of Rs 15,397.85 crore inflow in December 10,394.07 crore in the last month.

Overall, flows in the mutual fund industry 4,491.47 crore in December, down sharply from the flow of —- 13,263.56 crore in November. In December, strong inflows into equity MFs, index funds and other ETFs contributed to the overall market rally.

On the overall performance of mutual funds, Kavalireddy said, “This positivity was negated by net outflows from MFs”. 21,946 crore from the debt category, possibly on account of advance tax payments and redemptions at the end of the year. Liquid funds saw a net outflow of Rs 13,852 crore. Negative net flows were observed in 14 out of 16 categories under debt schemes.

As on December 31, 2022, the Assets Under Management (AUM) was 39,88,735.37 crore, a growth of 5.7% over the current year 2022.

On AUM, Kavalireddy said, “This low change can be attributed to the uncertainty in the equity markets and changing interest rate scenarios affecting the business environment at large. Obviously, investors will be able to diversify their portfolios between equity, debt, are keeping pace with these changes by reallocating investments. and hybrid schemes.”

For the full year 2022, FYERS data showed total net inflows across all mutual funds 71,443 crore, with positive inflows into equity schemes ( 1.61 lakh crore), index funds and ETFs (Rs 1.65 lakh crore) and negative inflows in debt schemes ( 2.5 lakh crore) collectively from the open and close-ended categories.

Kavalireddy said, 2022 has been a year of price and timing consolidation for the stock markets; Hence, the returns for many mutual funds will be low and even negative.

However, Kavalireddy suggests that investors remain disciplined and continue with their investments in a systematic manner.

“The current environment provides excellent entry points for passive and active investors alike to generate excellent returns over the next three to five years,” he added.

Disclaimer: The views and recommendations given above are of individual analysts or broking companies and not of Mint. We advise investors to do due diligence with certified experts before making any investment decision.