Equity mutual fund inflows increases to more than double to Rs 8,637 crore in June

Equity mutual fund inflows more than double to Rs 8,637 crore in June

According to data from the Association of Mutual Funds in India (AMFI), inflows into open-ended equity mutual funds experienced a significant surge of 166 percent in June, amounting to Rs 8,637 crore. This rise in inflows occurred amidst a consistent upward trend in the stock markets.

June marked the 28th consecutive month with positive equity inflows, highlighting the sustained investor confidence in this asset class.

The increase in inflows can be attributed to the Indian market’s steady recovery since March, with the Sensex, a prominent stock market index, recording a gain of approximately 7 percent during this period. In June, the index continued its upward trajectory, registering a 0.7 percent increase.

The positive market sentiment and favorable performance have encouraged investors to allocate their funds towards equity mutual funds, reflecting their confidence in the potential returns offered by the stock market.

In June, investments through systematic investment plans (SIPs) slightly decreased to Rs 14,734 crore compared to the previous month’s record high of Rs 14,749 crore. Despite the marginal dip, SIP investments remain robust, indicating continued investor participation in the mutual fund market.

Within the equity segment, smallcap funds experienced a surge in demand, with net inflows increasing by 66 percent month-on-month to reach Rs 5,471.75 crore in June. This suggests a preference for investments in smaller companies with higher growth potential.

On the contrary, largecap funds faced selling pressure, leading to net outflows of Rs 2,049.61 crore during the same month. Investors appeared to be reallocating their investments away from large-cap stocks.

In the Value or Contra Fund category, there was a notable increase in net inflows, amounting to Rs 2,239.08 crore in June, compared to Rs 582.21 crore in May. This indicates a growing interest in value-oriented investment strategies, which involve selecting stocks that are perceived to be undervalued relative to their intrinsic worth.

Overall, the data reflects a mixed trend in the mutual fund market, with SIP investments remaining resilient, smallcap funds witnessing increased inflows, and a shift in investor sentiment away from largecap funds towards value-oriented strategies.

Debt fund inflows experienced a significant decline in June, turning negative at Rs 14,136 crore, compared to the substantial inflows of Rs 45,959 crore in May 2023.

Within the debt category, liquid funds saw net outflows of Rs 28,545.45 crore during the month. Additionally, Ultra Short Duration Funds also witnessed net selling of -Rs 1,886.57 crore.

Equity mutual funds also faced a slump in inflows, declining by 50 percent to Rs 3,240.30 crore in May. This decline resulted from investors opting to withdraw some of their investments.

May’s equity inflows were the lowest recorded since November 2022, which saw inflows of around Rs 2,500 crore.

In summary, open-ended mutual funds collectively experienced net inflows of Rs 1,295.83 crore in June. However, debt funds witnessed a significant decrease in inflows, turning negative compared to the previous month. Additionally, equity mutual funds faced a decline in inflows as investors decided to withdraw some of their investments.

The total assets under management (AUM) of open-ended mutual funds saw an increase in June, reaching Rs 44.13 trillion compared to Rs 42.90 trillion in May. This growth in AUM indicates the continued interest and investment in mutual funds during the month.

Manish Mehta, National Head of Sales, Marketing & Digital Business at Kotak Mahindra Asset Management Company, commented on the June figures, stating that the net numbers were slightly higher than those of May. He also noted that while there might have been some profit booking at higher levels to maintain asset allocation, investors have continued to invest through systematic investment plans (SIPs) and systematic transfer plans (STPs).

This suggests that despite some investors taking profits and adjusting their portfolios, the consistent inflows through SIPs and STPs demonstrate ongoing investor participation and a commitment to long-term investment strategies.

Overall, the increase in AUM reflects the overall growth and resilience of the mutual fund industry, with investors actively contributing to their investments through various channels.