Equity MFs garner Rs 14,889 cr inflows in Jan amid volatility, FPI selloff

The tally was lower than Rs 25,706 cr garnered in December 2021, but is still a respectable number considering there were no large NFOs in January, unlike the previous month

Investors poured nearly Rs 15,000 crore into equity-oriented mutual fund (MF) schemes in January, even as the markets set on a wild ride—first soaring 6 per cent and later giving up all the gains due to concerns around monetary tightening by the US Federal Reserve.

The tally was lower compared to Rs 25,084 crore garnered in December 2021. However, it is still a respectable number considering there were no large new-fund offers (NFOs) in January unlike the previous month.

More importantly, this was the 11th straight month of inflows into equity MFs. So far this financial year, equity schemes have moped up Rs 1.17 trillion in the form of investor flows. These funds have provided stability to the domestic market and acted as a counterbalance to outflows from foreign portfolio investors (FPIs), which have accelerated since October 2021.

“Retail investors continue to maintain an optimistic stance on investing on market dips. While, on one hand we are seeing FPI outflows on the other hand we are seeing positive flows from domestic investors. This is a very positive change amongst investors, it is always advisable to buy on dips for better rupee-cost averaging resulting in good outcomes in the long term,” said Akhil Chaturvedi, Chief Business Officer, Motilal Oswal AMC.

“Most investors continued to find the correction as a good entry point, which is evident from the quantum of funds mobilised,” added Kavitha Krishnan, Senior Analyst-Manager Research, Morningstar India.

The key source of sustained inflows has been the so-called systematic investment plan (SIP). In the current financial year, SIPs have seen inflows of around Rs 1 trillion. Bulk of the inflows from the SIP route are towards equity. In January, SIPs raked in Rs 11,516.62 crore, slightly higher than Rs 11,305.34 crore in December 2021.

The number of SIP accounts touched a new high of 50.4 million in January, up from 49 million in the preceding month. The assets under management (AUM) of SIP at the end of January 2022 was Rs 5.76 trillion.

Out of 11 equity subcategories, 10 saw net inflows, with flexicap receiving highest net inflows of Rs 2,527 crore. Other categories like largecap, large & midcap, midcap and smallcap funds saw net inflows of over Rs 1,000 crore each in Janaury. Only value funds saw net outflows of Rs 163.41 crore.

Even debt-oriented schemes saw net inflows of around Rs 5,087.61 crore in January led by overnight funds. Several of the debt categories like liquid funds, low duration funds, banking and PSU funds and short duration funds among others witnessed sharp net outflows.  Overnight funds saw net inflows of Rs 19,357.55 crore last month.

Retail investor’s confidence in the India growth story is reflected in the high quantum of monthly SIP flows, said NS Venkatesh, chief executive, Amfi. The flows have “overshadowed the uncertainties arising out of external factors like Fed rate hike and FPI outflows.”

Hybrid funds witnessed net inflows of Rs 6,230 crore in January.

Overall, the MF industry saw net inflows of Rs 35,251.67 crore and average assets under management as of January stood at Rs 38.9 trillion.