Retail investors pump in record Rs 20,245 crore into equity MFs in August

• Inflows in August even surpassed 2023’s highest monthly inflows recorded in March at Rs 16,693 crore.
• The debt funds category continued reported net outflows of Rs 25,872 crore during the month.
• The month has also seen record new SIP accounts being opened at 35 lakh. Systematic investment plans have been driving flows into equities over the last few years as investors have become more disciplined about investing.

Net inflows into equity oriented mutual funds for the month more than doubled to Rs 20,245.26 crore in the month of August against Rs 7625.95 crore recorded in the month of July. The total number of systematic investment plans accounts stood at 6.96 crore. Most equity funds saw fresh inflows barring the large cap funds and ELSS funds. The debt funds category continued to see outflows of Rs 25,872 crore, largely driven by the outflows from liquid funds.

According to CEO of Association of Mutual Funds in India (AMFI), NS Venkatesh, “We believe that economic growth will be higher and corporate earnings will be better so we feel equity fund flows will continue.” New SIP accounts opened are more than 35 lakh, which is a record.

The highest inflows were into thematic and sectoral funds at Rs 4805.81 crore. The small cap funds too saw inflows of Rs 4264.82 crore like it did in the previous month. Investors seem to be disenchanted with the large cap funds because the category saw outflows of Rs 348.98 crore in August. Money market funds saw the lowest inflows during the month, as investors seem to have lost the appetite for debt funds after the indexation benefits have been withdrawn by the government earlier this year.

Net inflows into equity schemes had been moderating for the last few months, with investors booking profits. The tide has decisively turned in the month of August, which even saw inflows surpassing March inflows of Rs 16,693 crore. Since March, investors have been booking profits through redemptions, while the flows through the systematic investment plans (SIPs) remained robust. In July, net inflows into equity schemes stood at Rs 7625.95 crore while in June the same was Rs 8637 crore. Inflows through the SIP route remained strong during the month of July 2023 at Rs 15,243 crore against Rs 14,734 crore in June 2023.

The overall assets under management of the mutual fund industry continued an upward trajectory and rose to an all-time high by the end of July 2023 at Rs 46.4 lakh crore against Rs 44.4 lakh crore in June 2023. The gain was dominated by mark to market gains in equity holdings.

Inflows (ex-NFOs) into equity schemes were marginally lower during the month of July 2023 at Rs 4,600 crore compared to Rs 5600 crore in June 2023. Inflows in March 2023 were at Rs 16,693 crore, which declined to Rs 4,868 crore in April 2023 and further declined to Rs 3,066 crore in May 2023.

Debt funds saw outflows dominated by liquid funds. Barring liquid funds, the inflows stood at around Rs10000 crore in other debt fund categories. Other categories of debt funds have been witnessing moderate inflows over the last four months as interest rates peak.

Small cap funds continued to perform well thanks to the recent rally. This category of funds outperformed the benchmarks after hitting lows in March 2023. Infrastructure funds have seen consistent outperformance in last one year as cyclical sectors outperform stable sectors like IT and Pharma, says ICICI Securities in its analysis. The banking sector similar to the infrastructure sector has been at the forefront in terms of performance in the last one year.