Mutual fund inflows drop due to a decrease in debt fund inflow. Large-cap funds find favour among investors.
In August, mutual fund inflows decreased by 43 per cent to Rs 1.08 lakh crore, down from Rs 1.89 lakh crore in July, mainly due to a 62 per cent decline in debt mutual fund inflows. The total assets under management (AUM) of open-ended mutual funds increased by 3 per cent, reaching Rs 66.43 lakh crore in August compared to Rs 64.69 lakh crore in July.
Equity Mutual Fund Trends
Inflows into equity mutual funds increased by 3 per cent in August, reaching Rs 38,239 crore from Rs 37,113 crore in July. The number of folios invested in open-ended schemes also increased to 2,03,978,705 from 1,97,860,440 during the same period.
Sectoral or thematic funds saw a slight decrease in inflows to Rs 18,117 crore from Rs 18,386 crore, while flexicap funds had the next highest inflow of Rs 3,513 crore. Largecap funds also saw a substantial surge in inflows from Rs 670 in July to Rs 2,636 in August. Small-Cap funds received Rs 3,209 crore in August.
The only equity categories that saw outflows were Equity Linked Savings Scheme (ELSS) funds and focused funds, which experienced outflows of Rs 205 crore and Rs 83.52 crore, respectively.
Debt & Hybrid Mutual Funds
In August, debt mutual funds received an inflow of Rs 45,169 crore, marking a 62 per cent decrease in net inflow for the category. Overnight funds saw the highest inflow at Rs 15,105 crore, followed by Liquid funds at Rs 13,594 crore.
The total inflows into hybrid fund categories decreased to Rs 10,005 crore in August from Rs 17,436 crore in July. All hybrid categories, except for conservative hybrid funds, received inflows in August, with the highest received in dynamic asset allocation or balanced advantage funds at Rs 3,215 crore.
Deepak Ramaraju, Senior Fund Manager, Shriram AMC said, "Despite stretched valuations, the demand continues to remain stronger, especially in the thematic, mid and small-cap funds. A partial shift of inflows from multi-cap to large was witnessed, and this can be temporary due to valuation differences."
"The share of net inflows to small-cap funds has doubled, and flexi-cap funds saw an increase of 12 per cent, indicating stronger demand for equities as an asset class despite high valuations," Ramaraju added.