Led by small-cap, midcap and thematic funds, inflows into equity mutual funds increased to ₹41,156 crore from ₹35,943 crore in November. Investors continued to add money through systematic investment plans, making purchases worth ₹26,459 crore in December, compared to ₹25,320 crore in the previous month.
Debt funds saw outflows of ₹1.27 lakh crore, largely on account of quarter-end outflows from liquid, overnight and money market funds and uncertainty of rate cuts.
As per data from the Association of Mutual Funds in India (Amfi), total average assets under management increased marginally to ₹69.33 lakh crore from ₹68.04 lakh crore in the previous month.
“The correction in the markets during the month provided a good investment opportunity for investors, which they didn’t fail to capitalise on. This logged the 46th consecutive month of net inflows into the segment,” said Himanshu Srivastava, associate director at Morningstar Investment Research India.
All equity-oriented categories received net inflows during the month. Sectoral and thematic funds continued to get the highest inflows, garnering ₹15,332 crore in the month, with ₹11,300 crore coming from new fund offers. In November, sectoral funds garnered ₹7,658 crore.
Midcap and small-cap funds and categories like multi-cap funds, which have significant exposure to these two segments, continued to receive strong inflows largely due to the strong past returns from this category. Midcap funds got ₹5,093 crore, while small-cap funds got ₹4,668 crore, flexicap funds attracted ₹4,731 crore, and multi-cap funds garnered ₹3,075 crore.Poor post-tax returns from debt funds and lack of visibility of interest rate cuts led to investors withdrawing money from them.
“Debt funds have seen huge outflows across the board as the interest rate cut now seems a distance away,” said Juzer Gabajiwala, director at Venura Securities.
In the hybrid segment, arbitrage funds, a product investors have been using to park idle money and earn more than savings bank accounts, lost ₹409 crore, with some investors moving money to equity and hybrid funds taking advantage of the correction.
Multi-asset allocation funds, which invest in a mix of debt, equity and gold, saw inflows of ₹2,574 crore. Balanced advantage funds saw inflows of ₹1,596 crore while equity savings funds saw inflows of ₹451 crore. With no new issues of sovereign gold bonds, investors continued accumulating gold exchange-traded funds, which saw inflows of ₹640 crore.
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