Top ten mutual fund categories which witnessed highest AUM growth in a year

August was a good month for the mutual fund industry with assets under management ( AUM) reaching an all-time high at Rs 47 lakh crore. Of the total AUM, over 50% or Rs 24 lakh crore is in equity, hybrid and solution-oriented schemes where the majority of retail investors invest their money, revealed an analysis by ICICI Securities.
 

Inflows (Ex-NFOs) came in sharply higher at Rs 15200 crore in August as compared to Rs 4600 crore in July 2023.

Inflows in Midcap funds increased from Rs 1600 crore to Rs2500 crore, and Multicap funds increased from Rs 1000 crore to Rs 2000 crore).

Thematic funds flows increased by Rs 2500 crore.

Small-cap funds saw the highest AUM growth in the last year at 61 per cent, followed by multi-cap funds at 45 per cent and sectoral funds at 35 per cent.

Smallcap funds continued to see higher inflows at Rs 4265 crore vs Rs 4171 crore in July. Inflows in 8 months from January 2023 to August 2023  stood at Rs26000 crore. Last year same time (Jan-Aug 2022), inflows were at Rs 13000 crore.
 

"Indian equity markets have rallied sharply in last 3-4 months to scale fresh all-time high levels. Investors should avoid the temptation of booking profit as outlook remains positive on the back of sustained earnings growth. Lumpsum investment however should be deployed at every minor correction," said Sachin Jain, analyst at ICICI Securities.

In debt, corporate bond funds saw higher inflows after many months. Rest of the categories saw marginal inflows with Liquid funds witnessing outflows.

Within equity funds, IT funds made a strong comeback and outperformed in last three months after having underperformed prior to that. Pharma funds followed the performance trajectory of IT funds which after having underperformed significantly in the last one year, staged a comeback in the last three month as investor’s interest was visible at lower levels.

Small cap funds continue to perform well and have outperformed in the recent rally from the lows in March 2023. In the last four months, from the lows in March 2023, BSE Small cap index is up 30% while the S&P BSE Sensex was up less than 17%. Small cap funds have seen significant underperformance in the last few years. "If overall markets remain stable, small cap funds may continue to outperform, going forward," said Jain.

IT funds made a comeback and outperformed in last 3 months. Pharma funds underperformed in last one month but remain better performer since last 3 months. Infrastructure funds also remain better performer. Small cap/Midcap funds continue to outperform

 Infrastructure funds have seen consistent outperformance in last one year as cyclical sectors outperform stable sectors like IT and Pharma. The banking sector similar to infrastructure sector has been at the forefront in terms

of performance in the last one year. Banking sector while has recently seen some consolidation while consumption funds have also outperformed in the last two months as sector rotation was witnessed with interest coming in segments like FMCG, auto, retail, which are a part of the larger consumption theme.

"Sector rotation has been happening sharply in the last few quarters. Investors should be extra vigilant while taking exposure to sector fund,' cautioned Jain.