Equity MFs inflows slid 16% in March as smallcaps lost sheen
Inflows into equity mutualfund schemes were down 16% in March at ₹22,633 crore compared with ₹26,865 crore logged in February on the back of concern over high valuation.
For the first time in 30 months, smallcap funds registered a net outflow of ₹94 crore last month against an inflow of ₹2,922 crore in the previous month. This comes on the back of a stress test that highlighted the risk associated with investing in these funds.
This apart, the smallcap index fell sharply last month on profit booking.
Midcap funds registered a lower inflow of ₹1,018 crore in March compared with ₹1,808 crore in February.
For the first time in 30 months, smallcap funds registered net outflow of ₹94 crore last month
Investment risk
Venkat Chalasani, CEO, Association of Mutual Funds in India, said the stress test helped investors make informed decisions by helping them understand the risks involved in smallcap investments. While part of the smallcap outflow can be due to portfolio rejig, he added the smallcap index has also fallen sharply last month but has recovered since.
Highest inflow
Thematic funds recorded the highest inflow of ₹7,918 crore in March after five NFOs mopped up ₹3,074 crore. Among hybrids, multiasset funds got ₹2,681 crore (₹4,043 crore).
Melvyn Santarita, Analyst at Morningstar Investment Research, said some of the leading fund houses have stopped lumpsum investments in smallcaps, accepting only SIPs.
Mid and smallcap categories have the potential to deliver good returns, but investors should have a longer time frame and consider SIPs to ride the volatility, he added.
SIP inflows up
SIP inflows increased to ₹19,270 crore last month against ₹19,186 crore in February. In FY24, SIP inflows increased 28% to hit a new high of ₹1.99lakh crore against ₹1.56lakh crore in FY23.
The industry’s AUM was down to ₹53.40lakh crore (₹54.54lakh crore) in March, largely due to an outflow of ₹1.98lakh crore from debt funds.
With a unique investor base of 4.45 crore in FY24, the industry’s AUM rose 35%to ₹53.40lakh crore against ₹39.42lakh crore the previous fiscal on the back of robust inflows and a sharp market rally.
(The writer is with The Hindu businessline)