The Indian mutual fund industry has seen a surge in equity-oriented mutual fund inflows during the period from June to October 2023, with a significant rise in demand for small-cap and sectoral funds. According to the data, equity-oriented mutual funds inflows increased from Rs 8,637 crore in June to Rs 7,625.95 crore in July, further doubling to Rs 20,245.26 crore in August. Thematic and sectoral funds led the charge with the highest inflows at Rs 4,805.81 crore, followed by small cap funds with Rs 4,264.82 crore.
However, large cap funds experienced outflows of Rs 348.98 crore during this period. The mutual fund industry managed to attract four crore unique investors with Systematic Investment Plan (SIP) accounts increasing to 7.13 crore. Despite a decrease in equity mutual fund inflows to Rs 14,091.26 crore in September from August's high, inflows rebounded to Rs 19,932 crore in October thanks primarily to retail investors' contributions.
The trend of increased inflows has been observed despite profit booking by investors leading to moderating net inflows since March 2023. Inflows surpassed the March figure of Rs 16,693 crore in August, indicating renewed investor interest. Retail investors have played a crucial role in supporting markets with inflows of Rs 108,517 crore into equity-oriented schemes during the first nine months of the year despite foreign investors' caution.
The number of new SIP accounts opened in 2023 reached a record high of over 35 lakh. The mutual fund industry's assets under management stood at a staggering Rs 47.8 lakh crore.
In contrast to the buoyant equity segment, inflows into long-term debt funds remained negligible due to the government's withdrawal of indexation benefits earlier in the year, and there were outflows from liquid funds. SIP inflows remained robust with Rs 15,243 crore in July compared to Rs 14,734 crore in June. Money market funds saw the lowest inflows due to reduced interest in debt funds following the government's withdrawal of indexation benefits.
Despite the outflows from large cap and certain debt funds indicating investor disenchantment, NS Venkatesh, the CEO of Association of Mutual Funds in India (AMFI), expressed optimism about future economic growth and corporate earnings. He expects equity fund flows to continue their upward trajectory.
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