Led by SIPs, inflows into equity MF schemes up 25% in FY24 at ₹1.86lakh cr
Thanks to the buoyancy in SIP (systematic investment plan) investments, net inflows into equity mutual funds jumped 25 per cent in the financial year ended March 31, to ₹1.86lakh crore against ₹1.49lakh crore in FY23. This increase comes despite lingering concerns over high market valuations.
Investment in hybrid schemes turned positive at ₹1.47lakh crore against an outflow of ₹16,790 crore in FY23, while outflows from debt funds moderated to ₹21,073 crore (₹1.81lakh crore), according to the Association of Mutual Funds in India data.
Interestingly, inflows through small and midcap funds, at ₹62,805 crore, accounted for 34 per cent of the overall equity investments in FY24.
SMALL-/MID-CAP FROTH
Anand Vardarajan, Business Head – Alternate Products and Product Strategy, Tata Asset Management, said the inflow into equity schemes was largely led by small and midcaps, but going ahead it may moderate given the caution coming from several quarters with respect to valuation. This is already reflected in the data released for last month.
Moreover, many fund houses have restricted inflows into smallcap funds to protect investor interest. Besides, SEBI has directed MFs to conduct regular stress tests on small and midcap funds, he said. On the positive side, he added the money slated for small and midcaps are flowing into large and flexicap funds especially via SIPs.
Given the equity investment frenzy, inflows into hybrid funds also turned positive at ₹1.47lakh crore against a net outflow of ₹16,970 crore in FY23.
It was a washout for debt funds as they registered an outflow of ₹21,073 crore last fiscal against net outflow of ₹1.81lakh crore in FY23.
BULLISH NIFTY
Deven Mistry, Research Analyst, Motilal Oswal Financial Services, said the MF industry’s total AUM jumped 35 per cent last fiscal to ₹53.4lakh crore propelled by growth in flows into equity funds, ETFs, arbitrage funds and liquid funds.
The Nifty ended FY24 on a high, posting a 29 per cent return compared to a one per cent fall in FY23. This remarkable performance occurred despite weak global macros, high interest rates, and geopolitical uncertainties, which contributed to volatility and apprehension in global markets.
“Indian markets continued to showcase resilience and outperformed other emerging markets handsomely. MSCI India outperformed global markets by a wide margin in the past 12 months,” Mistry added.