Despite bulls ruling the roost, inflows into equity mutual funds slow down
Notwithstanding the heady inflows into equity mutual fund schemes, five of the 11 equity categories have registered a net outflow or lower inflow compared with last fiscal.
Interestingly, large-cap and focused funds have seen a net outflow of ₹613 crore and ₹4,060 crore in the year ended March against an inflow of ₹8,373 crore and ₹6,357 crore in FY23, according to a FYERS research report.
NEW TAX REGIME
Similarly, with the introduction of the new tax regime, equity-linked savings schemes (ELSS) have lost their glory and inflows plunged 87 per cent to ₹1,040 crore (₹7,744 crore). The new tax regime provides for a
With the introduction of the new tax regime, equity-linked savings schemes have seen inflows plunging 87 per cent
lower tax rate but does not provide for any exemptions and deductions such as house rent allowance (HRA), leave travel allowance (LTA), 80C, 80D and many more.
Inflow into the flexi-cap category was down nine per cent at ₹15,502 crore (₹16,961 crore) as investors preferred to book profit after the recent run-up in equity markets. In fact, flexi-cap is the most sought-after as market
regulator SEBI norms provide a free hand for the scheme fund managers to move across market cap without any restrictions.
Investment in the dividend yield category fell 11 per cent to ₹3,470 crore (₹3,892 crore) due to the lack of any new fund o®er in this category. However, inflows into equity mutual funds rose 25 per cent at ₹1.84-lakh crore (₹1.47-lakh crore), largely aided by a mad rush to invest in small and mid-cap schemes.
Investments in small and mid cap categories increased 82 per cent and 10 per cent respectively to ₹40,189 crore (₹22,104 crore) and ₹22,226 crore (₹20,206 crore). Net inflows into multi-cap fund doubled to ₹22,958 crore (₹11,420 crore)
Gopal Kavalireddi, VicePresident of Research, FYERS said investors seeking higher returns have shifted their portfolios towards mid and small cap segments of the market, rather than large-cap stocks.
While dividend yield funds, which focus on generating income, would have limited capital appreciation potential, the relevance of ELSS as a tax-saving option has decreased with the introduction of the new tax regime.