 "Mutual funds (MFs) are gearing up with offerings centered on the ‘quality' theme, as this investment approach is expected to rebound following three years of underperformance compared to the ‘value' theme.")
Monthly net inflows to equity mutual fund (MF) schemes soared 22 per cent month-on-month (M-o-M), reaching an all-time high of Rs 41,887 crore in October, even as the stock markets faced a sharp correction. The previous record of Rs 40,608 crore was set in June this year.
Also in October, the MF industry's assets under management (AUM) climbed to a record Rs 67.3 trillion, despite equity assets experiencing notable mark-to-market losses. This new AUM peak was bolstered by all-time-high inflows totalling Rs 2.4 trillion, including Rs 1.6 trillion into debt funds and Rs 23,428 crore into passive funds.
Industry experts attributed the surge in inflows into active equity schemes to strategic one-time investments by investors aiming to capitalise on market dips. “The correction in the markets provided a good investment opportunity and investors didn’t fail to capitalise on it, thus logging the 44th consecutive month of net inflows into the segment,” said Himanshu Srivastava, associate director-manager research, Morningstar Investment Research India.
The moderation in outflows was also a factor. Investors withdrew Rs 32,840 crore from equity schemes last month as against Rs 37,748 crore in September.
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The record-breaking inflows were buoyed by systematic investment plan (SIP) contributions hitting a peak of Rs 25,323 crore and new fund offerings (NFOs) contributing Rs 4,047 crore, according to data from the Association of Mutual Funds in India (Amfi).
Amfi data also revealed that the number of SIP accounts surpassed the 100 million milestone last month, with total retail investment accounts, or folios, reaching a new high of 172.3 million.
“Net sales numbers were strong, aided by NFOs in the sectoral category,” noted Manish Mehta, national head-sales, marketing & digital business, Kotak Mahindra AMC. “Largecap-biased schemes continue to see inflows. Distributors continue to guide investors to navigate market volatility through SIPs and systematic transfer plans (STPs), and occasional one-time purchase on days when the markets witness correction.”
Largecap-oriented schemes -- largecap and flexicap funds -- drew a net inflow of Rs 8,633 crore. Inflows into midcap and smallcap funds followed closely at Rs 8,455 crore. Sectoral and thematic funds topped the charts with Rs 12,279 crore in net inflows, supported by Rs 3,517 crore collected from four new sectoral and thematic NFOs.
The equity market pullback in October, spurred by weaker-than-expected quarterly results in select sectors and a wave of foreign portfolio investor (FPI) selling ahead of the US elections, saw the Nifty 50 and Sensex end the month down by 6.2 per cent and 5.8 per cent, respectively.
“We have seen heightened volatility in the markets amid FPI selling due to major global events, including US elections,” said Akhil Chaturvedi, executive director & chief business officer, Motilal Oswal AMC, adding the healthy net flows are “a testimonial to the resilience among domestic investors” in the face of market downturn.
Venkat Chalasani, chief executive of Amfi, sees these inflows as evidence of growing investor maturity. “October 2024 demonstrated remarkable momentum in India's MF industry. The 44th consecutive month of positive equity inflows since March 2021 underscored the deepening maturity of Indian investors,” he said.
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