The November 2023 mutual fund industry data released by Association of Mutual Funds in India (AMFI) highlighted some key insights. While mutual fund industry’s assets under management (AUM) reached ₹49.04 lakh crore in the month, equity funds witnessed net inflows marking it the 33rd consecutive month of net inflows.
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Here are key trends revealed by the AMFI data:
Mutual fund industry AUM nears ₹50-lakh crore landmark
The total assets under management stood at ₹49.04 lakh crore in November versus ₹46.71 lakh crore month-on-month (MoM).
According to Gopal Kavalireddi, Vice President of Research at FYERS, the benchmark indices hitting all-time highs in November boosted the mutual fund industry.
"Equity AUM hit an all-time high on the back of excellent performances from Nifty 50 (5.52%), Nifty mid cap 100 (10.37%) and Nifty small cap 100 (12.03%)," he said.
Equity funds see inflows for 33rd consecutive month
The equity segment continued its buoyant trend for the 33rd consecutive month of positive net flows in November. Mid- and small-cap equity funds continue to receive the bulk of the inflows, accounting for 41% out of the total equity inflows.
Small-cap funds saw the highest inflows among equity funds at ₹3,699 crore, trailed by mid caps at ₹2,666 crore and sector/thematic funds at ₹1,965 crore.
Fund flows into large caps continue to be tepid, but investors continue to opt for index funds, pouring in ₹1,353 crore for the month.
"Both the mid-cap and the small-cap indexes have seen a sharp rally over the last six months and one year. Consequently, investors have also flocked to this category with ever increasing flows," said Melvyn Santarita, Analyst at Morningstar Investment Research.
Santarita, however, added that these categories are inherently volatile with sharp drawdown risks. Therefore, investors should have a long-term time horizon while investing in these categories.
"Opting to invest in these categories via the SIP route is a good way by which investors can ride the volatility whilst dollar cost averaging over long periods," he added.
SIP contributions cross ₹17,000-crore mark for the first time
The Indian mutual fund industry has witnessed an unprecedented surge in systematic investment plans (SIPs).
According to data released by AMFI, SIP contributions soared to a historic high of ₹17,073.30 crore in November.
Debt funds see outflows
Debt mutual funds have witnessed an outflow of ₹4,706.75 crore in November against ₹42,634-crore inflow reported in October. Except for five categories — money market, long duration, banking and PSU, gilt and floater — all other categories saw net outflows.
Multi asset funds see largest inflows in the hybrid category
The multi asset category has seen the largest inflows in the hybrid category, second only to arbitrage.
Investors seem to be diversify across other asset classes like commodities and want to participate in multi asset funds, said Anand Vardarajan, Business Head, Institutional Clients, Banking, Alternate investments & Product Strategy, Tata Asset Management.
"Arbitrage flows continue to be very strong. Yields coupled with tax attractiveness continue to attract investor interest in this category," he said.
NFOs raise ₹2,583 crore in the month
A total of 14 schemes were launched in November 2023 in both open-ended and close-ended categories, raising a total of ₹2,583 crore. Six schemes were from the equity category and accounted for ₹1,907 crore of funds collected in the month.
"November witnessed the launch of three sectoral/thematic funds (Aditya Birla Sun Life Transportation and Logistics Fund; Kotak Consumption Fund; quant Momentum Fund) and they cumulatively garnered ₹1,315 crore. Similarly, Helios Flexi Cap Fund managed to garner ₹551 crore thus aiding the flexi cap category which managed to cumulatively garner ₹1,667.5 crore during the month," said Melvyn Santarita, Analyst, Morningstar Investment Research.
Gold ETFs dip to ₹333 crore
The quantum of net flows in gold ETFs dipped to ₹333 crore in November from ₹841 crore in October.
With the ongoing geopolitical tensions, US inflation still higher than the desired number, the appeal of gold as a safe haven and hedge against inflation should continue.
"Recently, gold prices in dollar terms scaled new highs after going past the $2,100 per ounce mark. Given this backdrop, there could be some profit-booking in the near term. However, with the perceived risks overall, flows could continue to be positive going ahead," said Santarita.
