Led by a surge in inflows into small-cap and mid-cap funds, the mutual fund industry's average assets under management (AUM) rose 4.3% month-on-month to Rs 85.76 lakh crore in July. Large-cap funds, however, saw net outflows of Rs 1,322 crore — their first in 30 months.
Equity-oriented schemes received Rs 24,697 crore during the month, extending their positive-flow streak to 65 months, although inflows moderated from Rs 29,075 crore in June, according to monthly data released by industry body Amfi on Tuesday.
Small-cap funds emerged as the biggest beneficiaries among equity categories, attracting Rs 7,768 crore in July, up from Rs 5,602 crore in June. Mid-cap funds also saw higher inflows at Rs 6,192 crore.
Systematic investment plan (SIP) contributions continued to grow, reaching a four-month high of Rs 31,961 crore in July, just below the record Rs 32,087 crore registered in March. SIP contributions rose 0.6% from Rs 31,781 crore in June. Active SIP accounts increased to 10.63 crore from 10.52 crore, a net addition of around 11 lakh accounts.
Large-cap funds, in contrast, recorded net outflows of Rs 1,322 crore in July, their first negative flow in nearly 30 months. The category had last reported an outflow in December 2023.
Amfi chief executive Venkat Chalasani attributed the outflow partly to profit booking by domestic investors. Redemptions from large-cap funds rose to Rs 6,067 crore, compared with a monthly average of around ₹4,000 crore, while mobilisation stood at about Rs 4,700 crore.
The mutual fund industry added 32.66 lakh folios during the month, taking the total number of folios to 28.09 crore. Equity schemes accounted for 18.72 crore folios, while other schemes accounted for 5.74 crore.
Morningstar's Himanshu Srivastava said the flows reflected continued investor confidence in the long-term growth prospects of emerging businesses, while the recovery in mid- and small-cap segments appeared to have reinforced that confidence.
“The willingness to deploy fresh capital into these categories also reflects investors' comfort with taking calculated exposure to higher-growth segments of the market,” he said.
Sectoral and thematic funds also continued to attract inflows, although at a slower pace. Dividend yield, value/contra and ELSS funds, on the other hand, saw redemptions.
Debt-oriented schemes recorded a sharp reversal in July, attracting net inflows of Rs 1.88 lakh crore against outflows of Rs 1.09 lakh crore in June. The turnaround was largely driven by liquidity-oriented categories.