Equity inflows hit five-month high in August, debt funds see outflows

Equity mutual funds have witnessed a net inflow of Rs 20,161 crore in August 2023, according to Association of Mutual Funds in India (AMFI) data. This marked a significant increase compared to the previous month, with July 2023 seeing an inflow of Rs 7,505 crore. This surge in equity mutual fund investments to a five-month high indicates renewed investor confidence in the stock market.

However, the story was different for debt mutual funds, which faced outflows worth Rs 25,872 crore.

Among the various categories of mutual funds, some displayed strong investor interest, while others experienced outflows. The small-cap funds, once again, witnessed inflows at Rs 4,265 crore versus Rs 4,171 crore inflows in July 2023. The mid-cap funds saw an inflow of Rs 2,512 crore versus Rs 1,623 crore inflows month-on-month, signalling confidence in medium-sized companies.

Even multi-cap funds received a healthy inflow of Rs 3,422.14 crore, indicating investor diversification strategies. Large-cap funds, however, witnessed outflows of Rs 348.98 crore, potentially reflecting a cautious stance on larger companies.

The dividend yield fund received an inflow of Rs 416.29 crore, likely appealing to investors seeking income through dividends. Value and Contra Funds attracted Rs 1,364.62 crore, while focused funds experienced outflows of Rs 471.10 crore, indicating a shift in investor preferences.

Hybrid funds witnessed an inflow of Rs 17,082 crore as compared to Rs 12,41 crore in July 2023. Liquid funds saw an outflow of Rs 26,824 crore, while exchange-traded funds (ETFs) saw an inflow of Rs 1,893 crore.

Investors showed strong interest in sectoral and thematic funds in August, contributing Rs 4,805.81 crore to this category, possibly driven by specific sectoral or thematic trends. ELSS (Equity Linked Savings Scheme), however, saw outflows of Rs 26.69 crore. The Flexi Cap Fund category attracted Rs 2,192.86 crore.

Notably, large-cap funds, focused funds, and ELSS were among those facing outflows in August. The shift in investment preferences highlights the dynamic nature of the mutual fund industry, influenced by factors such as market conditions, investor sentiment, and economic outlook.

On the other hand, five NFOs from the sectoral fund category collectively garnered Rs 2,556 crore. A total of Rs 5,002 crore was raised through 7 NFOs in the equity categories, while Rs 2,247 crore was raised through one hybrid category scheme.

The Total Assets under Management (AUM) by the end of August stood at Rs 46.63 lakh crore versus Rs 46.37 lakh crore with equity AUM contribution at Rs 18.4 lakh crore versus Rs 17.8 lakh crore (MoM). SIP inflows for August were at Rs.15,813 crore, well above the Rs.15,000 crore level for the second month, AMFI data showed.

Commenting on the same, NS Venkatesh, CEO at AMFI, said that economic growth is expected to improve, and the markets are expected to grow.

"India hosted very successfully the G20 summit this year, which has generated positive sentiments for the country and its economy on the global platform. Thus, the overall outlook for the mutual fund industry in India continues to be positive. The industry’s focus on investor education and protecting the interests of the investor community has bolstered investor confidence in the category. The industry continues to work towards the aim of achieving Rs 100 lakh crore in AUM over the next few years and we are almost halfway there already," he said.