Equity MF inflows at nearly 2-yr high in Jan; SIPs hit record high
Equity mutual funds attracted a net inflow of ₹21,780 crore in January, making it the highest monthly infusion in nearly two years, propelled by investors’ continued preference for small-cap funds and huge contributions from thematic funds.
Also, the latest flow was about 28% higher than inflows of ₹16,997 crore seen in December despite slight volatility in equity markets.
Moreover, monthly systematic investment plan (SIP) contributions reached an all-time high of ₹18,838 crore, surpassing December’s ₹17,610 crore, according to the data released by the Association of Mutual Funds in India (AMFI) on Thursday.
Further, SIP accounts surged to 7.92 crore in January along with a milestone of 51.84 lakh new SIP registrations.
“Despite January’s volatility, equity mutual funds displayed resilience. This sustained confidence in equity MFs amidst market fluctuations underscores investors’ commitment to longterm wealth creation strategies,” Pankaj Shrestha—head of investment services, at Prabhudas Lilladher, said.
The flow in January was the highest since March 2022, when equity-oriented mutual funds witnessed an inflow of ₹28,463 crore. Also, the latest flow marks the 35th consecutive month of net inflows in equity funds.
The equity segment was also aided by three new fund launches in January which garnered ₹967 crore cumulatively, Melvyn Santarita, analyst, Morningstar Investment Research India, said.
Thematic and small-cap oriented funds were the primary contributors to the inflows in equity funds as they attracted ₹4,805 crore and ₹3,257 crore respectively. In addition, multicap funds witnessed an inflow of ₹3,039 crore.
Though small-cap funds garnered more than ₹3,000 crore of net flows for the fourth consecutive month, the quantum was lower by ₹600 crore on a monthon-month basis. Interestingly, fund flows into the large-cap category at ₹1,287 crore, which was at the highest level in 19 months. This came following a withdrawal of ₹281 crore in December.
“With midcaps at 15% and small caps at 20% premiums, investors are realising the considerable valuation gap with the large-cap segment, and accordingly making adjustments to their investments,” Gopal Kavalireddi, vice president of research at FYERS, said.
Akhil Chaturvedi, chief business officer, Motilal Oswal AMC, said that large-caps demonstrated positive contributions in January, reversing the net outflows experienced in December 2023. This shift in trend is in line with valuation differentials among large v/s mid and small caps, suggesting that large caps/ flexi caps oriented schemes may attract higher flows in the future.
Overall, the mutual fund industry has witnessed an inflow of ₹1.23 lakh crore in the month under review as compared to an outflow of ₹40,685 crore in December. This huge inflow was driven by contributions from debt-oriented schemes at ₹76,483 crore, hybrid schemes at ₹20,637 crore along with equity schemes.