Mutual fund industry witnessed massive inflows of INR 90,127 crore in July, unlike outflows of INR 1,57,102 crore in open-ended schemes in the last month. All major categories including equity, debt, hybrid and ETFs saw inflows in July. Inflows from open ended equity funds including ELSS continued their uptrend even in July at INR 8,113 crore, growing 6% over June inflow of INR 7,663 crore.
Overall asset under management (AUM) of the industry rose by 1.2% in July compared to the last month end and now stands at INR 24.54 lakh crore.
Among open-ended equity categories including ELSS (Tax-Saver), July saw higher inflows in most categories compared to June, with noticeable exception being Multi caps. SIP contributions rose to its highest ever inflow at INR 8,324 crore in July. Experts attribute this to maturity of Indian retail investors taking advantage of the drastic fall in equity markets to increase their allocation to equities.
Large cap category saw maximum inflows in July and continued its uptrend compared to June. This was largely due to investors’ flight to safety amid fall in equity markets in July. Multi cap category lost its sheen in July compared to last month due to fall in broader indices. Focussed and Mid cap categories saw huge inflows last month owing to New Fund Offers in the respective categories. Inflows into small cap category dipped slightly.
Passive fund inflows more than doubled in July to INR 12,621 crore compared to INR 5,584 crore in June. This was largely on the back of government successfully raising INR 11,500 crore through further fund offer of fifth tranche of CPSE ETF.
Inflows into Hybrid funds, grew more than 8.5 times over June to INR 7,393 crore in July. Aggressive hybrid funds witnessed inflows after outflows for span of six straight months. Dynamic asset allocation inflows more than tripled to INR 1,324 crore in July compared to the previous month. Arbitrage funds continued to see higher inflows in July at INR 5,810 crore vs INR 3,166 crore in June.
Unlike June, inflows into Liquid, Overnight and Money Market categories stabilised in July, with the start of the new quarter. Credit risk and Medium term debt categories continued to see huge outflows for the fourth month in a row due to the risk aversion of retail investors as issues in debt markets persisted. Investors’ flight to safety is evident from higher inflows into safer categories like Money Market, Banking & PSU debt and corporate bond.
It is not advisable to take investment decisions based on inflows/outflows as these can be volatile. Your investment decisions should be based on your investment objective, investment horizon and risk profile. Consider investing for long term through SIP as it ensures rupee cost averaging.
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