MUMBAI: Despite the muted market performance leading to a steep 14 per cent fall in fund flows into equity mutual funds, and a steeper 26 per cent slump in inflows to large-cap funds and the red-hot SIPs taking a break with inflows remaining flat in the month, the overall mutual funds industry added Rs 0.82 trillion to their AUM at Rs 68.08 trillion in November. In October the assets under management had stood at Rs 67.26 trillion.
Both the Sensex and the Nifty closed in the red in November with Sensex losing 0.27 per cent and the Nifty shedding 0.31 per cent, on the back of incessant selling by foreign funds who have taken out more than Rs 1.5 trillion from the market during October and November.
While fund flows into equity mutual funds fell over 14 per cent to Rs 35,943 crore in November from the previous month, inflows to large-cap funds slumped 26 per cent to Rs 2,547.92 crore and the inflows into the red-hot SIPs took a break and remaining flat at Rs 25,320 crore marginally down from Rs 25,323 crore in the previous month, according to the latest data released by the industry lobby Amfi Tuesday.
Open-ended equity inflows dropped to Rs 35,943.49 crore in November, down 14.2 percent from the previous month, as investments into large-cap and thematic/sectoral funds cooled, according to the Association of Mutual Funds of India (Amfi). However, inflows into open-ended equity funds stayed in the positive zone for the 45th month in a row helping the industry close the month with overall positively.
Monthly investments via systematic investment plans or SIPs came in at Rs 25,320 crore against Rs 25,323 crore in October. But the fall in the number of new SIPs registered was much steeper at only 49.46 lakh as against 63.70 lakh in October but the number of SIP accounts stood at highest ever at 10.23 crore compared to 10.12 crore in October.
“The unwavering monthly SIP inflows remained above the Rs 25,000-crore-mark in November too, showcasing the investors' long-term vision and commitment to their financial goals, despite the short-term market fluctuations. The industry's ability to attract consistent SIP inflows is a vote of confidence in its ability to deliver value to investors over the long term," said Venkat Chalasani, the chief executive of Amfi.
Inflows into smaller-cap funds remained largely stable with small-cap funds getting 9 per cent more inflows at Rs 4,111.89 crore, and mid-cap funds rising 4.3 per cent to Rs 4,883.40 crore.
Sanjay Agarwal, a senior director at Care Ratings said, the AUM touched Rs.68.08 trillion buoyed by continued inflows in debt as well equity mutual funds despite market volatility due to various macroeconomic factors, and geopolitical events.
Nehal Meshram, a senior analyst at Morningstar Investment Research India said, investor interest in active duration strategies, such as Gilt funds, led to notable inflows of Rs 1,802.73 crore. This can be attributed to rising expectations of interest rate cuts in the near future, fuelled by signs of an economic slowdown reflected in the latest GDP figures. Such conditions enhance the appeal of long-duration funds, which tend to perform well in a declining interest rate environment.
Hybrid funds, which invest across equity, debt and commodities, saw 76 percent fall in inflows to Rs 4,123.69 crore, while other fund categories, such as index funds and gold exchange-traded funds also saw a fall in demand during November.
Overall, open-ended funds saw net inflows worth Rs 60,363.70 crore as against Rs 2,39,907 crore in October.
The industry showed an encouraging net flow number in spite of the festive holidays. SIP flows aided by lump sum purchase on certain market volatile days resulted in the overall net numbers coming in above Rs 30,000 crore. It also reflects investor mood towards mutual funds and its benefits of being an efficient vehicle for long term wealth creation,” said Manish Mehta of Kotak Mahindra AMC.
Motilal Oswal AMC’s Akhil Chaturvedi attributed the flattish SIP numbers to the heightened volatility due to various macro-economic factors, geopolitical events and the US election results, which resulted in investors opting for wait and watch approach while allocating larger amounts. There was also rotation towards higher-risk categories like small cap fund) from low-risk categories like large-caps and hybrid funds. Another reason for the slower growth is the low NFO launches.
In the fixed income category, inflows into debt funds crashed 92 percent to Rs 12,915.90 crore on a monthly basis. Categories like liquid funds, short duration funds, floater funds etc saw net outflows during the month. On the other hand, inflows into overnight funds, ultra short duration funds and money market funds slumped.