Key equity mutual fund categories see rise in AUM in December

Strong SIP book and new fund offers blaze the trail

Indian equity markets remained volatile in December due to a spike in Omicron cases in many countries. However, the assets under management (AUM) of key equity mutual fund (MF) categories have also seen a rise in December. 

A few of the equity sub-categories like large-cap funds, flexi-cap funds, and mid-cap funds have seen a surge in AUM on a month-on-month basis in December, as investors continued to show faith, despite uncertainty in the markets. In the past one month, the S&P BSE Sensex was down 0.93 per cent.

G Pradeepkumar, chief executive officer, Union Asset Management Company, “It was a good month in terms of flows. Investors have used the correction to invest in equity markets. Apart from pure equity funds, the industry continues to see strong flows in hybrid categories, such as balanced advantage funds.

Among the equity categories that saw the biggest increase in assets are large-cap and flexi-cap funds. The large-cap fund category saw its AUM increase to Rs 2.19 trillion at the end of December, from Rs 2.14 trillion in November, reveals the data from the Association of Mutual Funds in India.

The flexi-cap segment saw its AUM surge Rs 4,687 crore to Rs 2.03 trillion in December. Even the mid-cap and small-cap funds, along with the large- and mid-cap category, grew their AUM. The AUM data is up to December 29.

Market participants also say that equity funds have continued to witness inflows in the past few months due to a strong systematic investment plan (SIP) book and new fund offers launched by fund houses.

In the current fiscal year (2021-22), inflows through SIPs have been over Rs 77,978 crore. In the past three months, SIPs' monthly contribution was over Rs 10,000 crore.

MFs have even continued to remain net-buyers in the cash market. In December, they bought shares worth nearly Rs 18,901 crore, shows the data from the Securities and Exchange Board of India.

ICICIdirect Research in its note says, “The recent correction was overdue and should be construed as a healthy one in the overall larger uptrend. Historically, markets have seen correction of 10-15 per cent almost every year. It is difficult and actually a futile exercise to predict whether the market will correct further or will recover from the current levels itself. In general, a 10 per cent correction is an attractive enough “dip” to follow the time and tested “buy on dips” allocation strategy. Investors may therefore, allocate a lump sum amount at the current levels, apart from their regular SIPs.