Mutual fund inflows continued their positive momentum in August and came in at INR 1,04,185 crore, up 15.6% over the previous month for open-ended schemes. Major categories like equity, debt and hybrid witnessed inflows, while ETFs witnessed outflows. Within this, inflows into open ended equity funds including ELSS were at a 5-month high in August at INR 9,152 crore, up 12.8% over July.
Overall asset under management (AUM) increased by 3.8% in August vs July and now stands at INR 25.5 lakh crore.
Among open-ended equity categories including ELSS (Tax-Saver), major sub-categories like large cap, multi cap, small cap and ELSS funds witnessed higher inflows in August compared to July. This is majorly attributed to the lower valuations post the sell-off in equities. Industry experts believe that investors increased their lumpsum investments after markets witnessed a correction. Inflows into mid cap category dropped slightly in August compared to July. Although SIP inflows remained stable over INR 8,100 crore in the last few months, inflows in August witnessed a marginal decline of 1.1% to INR 8,231 crore vs July.
Net inflows, largely in all equity categories, especially in small and mid cap and ELSS funds signifies retail investors’ confidence in emerging businesses and disciplined tax planning. AMFI CEO attributed this successive interest in equity mutual funds as a sign of retail investors’ maturity, as they continued investing despite uncertain economic and volatile market situation.
Passive funds witnessed outflows of INR 1,372 crore this month, compared to inflows of INR 12,578 crore in July.
Overall inflows in open ended hybrid schemes declined to INR 4,947 crore in August compared to INR 7,393 crore in July. After witnessing inflows in July after six months, aggressive hybrid category saw significant outflow again this month. Inflows into dynamic asset allocation category dropped while those into arbitrage funds continued to remain robust amid heightened market volatility. Inflows into arbitrage funds were steady at INR 5,703 crore in August.
Overall inflows into open ended debt category rose 47% month on month to INR 91,127 crore in August. Primary reason for the same was a 75% jump in inflows of liquid funds to INR 79,428 crore in August compared to the previous month. Inflows into ultra short, low duration, money market and short duration funds were positive. Outflows from credit risk and medium duration categories continued for the fifth month in a row as investors continued their flight to safety, preferring corporate bond and banking and PSU debt categories as a safer alternative to riskier credit categories. Gilt funds witnessed inflows in the month of August following an unconventional rate cut by RBI.
However, 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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