Assets of large-cap, flexi-cap funds fall in April

A correction in Indian equity markets in April has led to a fall in daily assets under management (AUM) for a few equity fund categories.

Data from the Association of Mutual Funds in India shows that in April, large-cap, flexi-cap, and sectoral funds saw a descent in daily AUM, compared with March.

The daily AUM in the large-cap space was at ~2.23 trillion in April, as opposed to ~2.26 trillion in March.

The AUM of flexi-cap funds reduced to ~2.05 trillion in April, in contrast to ~2.07 trillion in March.

Participants in the mutual fund (MF) industry say flows in April remain subdued by historical standards because there are last-minute investments in tax-saving instruments at the fag end of a financial year. “The flows were sluggish in April. However, a few mid-cap and small-cap stocks have run up. The fall, therefore, in AUM is largely attributed to market-price movements,” says G Pradeepkumar, chief executive officer, Union Asset Management Company.

Indian equity markets have been very volatile, largely due to sustained selling by foreign portfolio investors.

In April, the S&P BSE Sensex was down 2.57 per cent. However, the S&P BSE Midcap and the S&P BSE Smallcap indices were marginally up 1.29 per cent and 1.4 per cent, respectively. The daily AUM for small- and mid-cap funds improved in April. In the same month, the daily AUM of mid-cap funds was at ~1.61 trillion, compared with ~1.58 trillion in March. Small-cap funds saw their daily AUM rise to ~1.08 trillion in April, from ~1.05 trillion in March.

In the past few months, flows into equity funds have remained resilient as investors continued to invest, sharp market volatility notwithstanding. Equity MFS saw net inflows of ~1.64 trillion in 2021-22 (FY22), compared with net outflows of ~25,967 crore seen in the preceding financial year, buoyed by record inflows of ~28,463 crore in March.

In FY22, equity funds logged inflows in excess of ~20,000 crore in three months. In July and December, they saw net inflows of ~22,583 crore and ~25,082 crore, respectively.

The increase in net equity inflows was helped by surging equity markets, coupled with steady investor participation via systematic investment plans (SIPS) and successful new fund offers.

In FY22, inflows via SIPS stood at ~1.24 trillion, weighed up against ~96,080 crore in 2020-21. In March, inflows through SIPS recorded a new high of ~12,328 crore. However, market players are hopeful about flows picking up in the next few months.