Key trends from April AMFI data: Equity inflows decline sharply, investors flock to gold ETFs and more

"Having said so, broadly we see the investor interest in equity and equity oriented mutual funds on the rise and medium to long term trend would be positive for the asset class. Also, inflows in the small cap category remained strong in continuation of recent trend. Small caps look reasonably attractive at these levels post the price correction they went through during FY22-23," he said.

Mayank Bhatnagar, Chief Operating Officer at FinEdge attributed the decline to “profit booking” actions stemming from the lack of patience due to the extended lull in the market, and not having a goal-backed long term return expectation in mind while investing.

"Once again, we are witnessing a repeat cycle of high retail participation at the point of maximum financial risk, and low participation at points of maximum financial opportunity such as the one we are sitting on today. Interestingly, high retail outflows have traditionally signalled trend reversals, so we may well be close to the bottom of the time correction that we have been in since October 2021," he said.

Debt mutual funds witnessed a sharp turnaround in April as they received a huge net inflow of Rs 1,06,677 crore. Except for credit risk and banking and PSU fund categories, all the other categories witnessed net inflows. This came after the category received a massive outflow of Rs 56,884 crore last month,

Categories having shorter maturity profile were the biggest beneficiaries. Liquid funds received the highest net inflows during the month followed by money market fund and ultrashort duration fund category.

While liquid funds saw an inflow of Rs 63,219 crore, money market fund witnessed Rs 13,961 crore inflow in April. The ultrashort duration fund saw inflow of Rs 10,661 crore.

Gold ETFs saw net inflows to the tune of Rs 124 crore in the month of April 2023 after witnessing net outflows in the previous quarter.

"Over the past few months, we have witnessed gold prices rising. While gold prices rose, some investors would have chosen to book profits or take on risk on approach with a view that central banks would pause further rate hikes. That said, pertinent risks still engulf developed economies and therefore over the course of the month, investors again flocked to gold ETFs which is considered as a safe haven during uncertain times," said Himanshu Srivastava, Associate Director - Manager Research, Morningstar India,