Equity mutual funds see 34th month of inflows in December, midcap growth nearly halves

Equity mutual funds witnessed the 34th consecutive month of inflows in December 2023, with a rise to ₹16,997 crore from November's ₹15,514.5 crore, according to Association of Mutual Funds in India (AMFI) data. This surge reflects the investor interest in equities despite market fluctuations.

December's inflows showcased varied trends across different fund categories.

Small-cap funds saw a rise, attracting ₹3,857 crore compared to the previous month's ₹3,699 crore.

Conversely, large-cap funds experienced an outflow of ₹281 crore, contrasting with November's ₹307 crore inflow.

Mid-cap funds recorded an inflow of ₹1,393 crore, marking a decrease from the previous month's ₹2,666 crore.

One of the standout categories, the dividend yield segment, demonstrated growth, recording an inflow surge to ₹279 crore in December 2023 from ₹173 crore in November.

However, Equity Linked Savings Scheme (ELSS) faced an outflow of ₹314 crore, a notable contrast to the previous month's ₹104.4 crore outflow.

In an exclusive interaction with CNBC-TV18, G Pradeepkumar, CEO of Union Asset Management Company, highlighted the industry's landmark achievement in crossing the ₹50 lakh crore AUM mark.

He emphasised the improved net flows in equity compared to the previous month, indicating continued investor confidence in mutual funds.

Additionally, he stressed the significance of Systematic Investment Plans (SIPs) remaining overpriced, urging caution among investors.

Pradeepkumar advised investors to exercise caution, particularly regarding small-cap investments, suggesting a staggered approach due to the market's volatile nature.

He also forecasted a potential reversal in the interest rate cycle in the upcoming 2-3 years, indicating the need for a proactive investment strategy.

Despite fluctuations and contrasting trends in various fund categories, the overall faith of investors in mutual funds remained robust, indicating a resilient market sentiment towards equities.