Investors pump Rs 38,239 crore into equity mutual funds in August

Surge in SIP flows, strong NFO collections drive August collection to the second highest in a month

Equity mutual fund (MF) schemes raked in a net of Rs 38,239 crore in August, three per cent more than the preceding month, even as stocks exhibited high volatility amid uncertainty over the state of the US economy. 

The inflows were supported by strong collections by new fund offerings (NFOs) and a surge in systematic monthly flows.

The August tally is the second-highest for the calendar month after Rs 40,608 crore in June 2024.

The equity market closed with gains in August despite a sharp drop during the initial week.

The Nifty 50 declined almost 4 per cent in the first four sessions following global cues but staged a strong comeback in the latter half of the month to close the month with 1.1 per cent gains.

 

"The correction in the markets in the initial part of August provided investors a good buying opportunity. This is reflected in the strong net inflow numbers for August across the equity categories," said Himanshu Srivastava, associate director – Manager Research, Morningstar Investment Research India.

According to experts, the movements in the market have not had a major impact on the equity fund inflows largely owing to growing Systematic Investment Plan (SIP) flows.

Last month, the inflows through SIPs went up nearly 1 per cent month-on-month (M-o-M) to a new all-time-high of Rs 23,547 crore.

NFOs in popular categories were also a factor. Six NFOs came to a close last month, collecting Rs 11,067 crore. Five of them in the sectoral and thematic space garnered over 92 per cent of the aggregate collections.

"Net flows continue to remain encouraging with SIP and NFO inflows. Sectoral/thematic category of schemes witnessed strong inflows due to NFO. NFOs seem to be the preferred route for investors to take a lump sum allocation to mutual funds since schemes have the flexibility to invest over a stipulated time period," said Manish Mehta, national head - Sales, Marketing & Digital Business, Kotak Mahindra AMC.

Equity MF schemes have collected around Rs 1.7 trillion so far in the financial year FY2025. The tally is 92 per cent of the total collections of Rs 1.8 trillion in FY2024.

The robust inflows and the equity market rally led to a sharper growth in the assets under management (AUM) of equity schemes. 

With a 28 per cent rise during the five-month period, the AUM surged to Rs 30 trillion for the first time in August. The equity MF AUM is 45 per cent of the total assets being managed by the industry.

The overall AUM surged 3 per cent as funds across debt, passive and hybrid categories reported strong inflows.

"The industry assets rose to a new high, with an asset base of Rs 66.7 trillion at the end of August 2024. The positive inflow, along with folio count surpassing 200 million, reflect investor confidence and a growing appreciation for mutual funds as a preferred investment avenue," said Venkat Chalasani, chief executive, Association of Mutual Funds in India (Amfi).

Experts say stable MF inflows will continue to be a key driver for the market.

"The Amfi data indicates that domestic flows continue to be strong and despite global uncertainty and volatility, this will continue to drive markets. Despite stretched valuations, the demand continues to remain stronger," said Deepak Ramaraju, senior fund manager, Shriram AMC.