Net inflows in equity schemes rebounded to Rs 20K crore in October

Net inflows into active equity mutual fund (MF) schemes surged 42 per cent month-on-month (M-o-M) to Rs 19,957 crore in October after dropping to their lowest level in six months in September.

Gross investments scaled up 4 per cent, as investors looked to lap up MF units at a lower cost amid a correction in the equity market.

Key benchmark indices — the Nifty50 and the Sensex — had ended the previous month down 2.8 per cent and 2.9 per cent, respectively. This was their worst monthly showing in this calendar year. The Nifty Midcap 100 index fell 4.1 per cent, the most since June 2022, while the Nifty Smallcap 100 declined less than a per cent in October.

The net inflows were also supported by the surge in investments coming through the systematic investment plan (SIP) route. SIP inflows, which have been surging almost every month for more than a year now, scaled a fresh high of Rs 16,928 crore in October. The figure was 6 per cent higher than the September collection.

“SIP numbers show consistent M-o-M growth, underlining the strength of systematic investment plans. In addition, the high SIP account openings indicate a growing, committed investor base,” said NS Venkatesh, Chief Executive Officer, Amfi.

Over 3.4 million new SIP accounts were registered in October, according to Amfi data.

Among schemes, smallcap funds continue to draw the highest flows. Investors poured in Rs 4,500 crore into smallcap funds despite corrections and valuation concerns. Sectoral & thematic schemes (Rs 3,900 crore) and multicap funds (Rs 2,900 crore) were the next highest grossers.

Net inflows into debt schemes stood at Rs 42,634 crore, with the liquid fund category accounting for over three-fourth of these flows. In August, debt schemes had suffered outflows of Rs 1.01 trillion, while liquid funds had seen outflows of Rs 74,176 crore. Typically, during the end of every quarter debt schemes witness outflows as large corporates redeem their investments for advance tax payments.

 “The smallcap category continues to attract flows.  The correction in the last month provided some opportunities for clients to look at this category with renewed enthusiasm,” said Anand Vardarajan, business head – institutional clients, banking, alternate investments & product strategy, Tata AMC.

“Hybrid funds also continued to experience healthy net inflows led by arbitrage funds and multi-asset funds. This trend reflects the prevalent risk-off sentiment in the market, with investors seeking to diversify their investments while maintaining a focus on capital protection,” said Akhil Chaturvedi, chief business officer, Motilal Oswal AMC.

The average assets under management stood at Rs 47.8 trillion at the end of October, almost unchanged from the preceding month.