Equity mutual fund inflows slump in January, but which categories gained the most?

The assets under management of Indian mutual funds increased to Rs 38.01 trillion as on January 31 from Rs 37.72 trillion a month before, as domestic investors continued to invest in equity schemes.

However, net inflows into equity Mutual Funds slumped to Rs 14,887.7 crore in the first month of the year from Rs 25,076 crore during December, according to data from the industry group Association of Mutual Funds in India (AMFI). Still, January inflows were higher than November’s level of Rs 11,614 crore.

Debt funds recorded net inflows of Rs 5,087 crore, compared with outflows of Rs 49,154 crore in December, while hybrid funds—schemes which invest across equity, debt and gold—recorded net inflows of Rs 6,230 crore thanks to balanced advantage and aggressive hybrid funds.

Systematic investment plans (SIP) continued to be the favoured mode of investments for retail investors. The number of SIP accounts rose past 5 crore in January from 4.90 crore in December and 4.78 crore a month before. This shows that retail investors are understanding the nuances of managing market volatility and risk adjustment.

Also read: Interview with Fund Manager, PGIM India Mutual Fund

MF categories with most inflows

All but one equity fund categories recorded net inflows in January, with the value and contra fund category being the exception, AMFI data show.

Flexi-cap schemes—the all-time favourites for many investors—led the pack with net inflows of Rs 2,527 crore. Thematic and sectoral funds remained at No.2 position—just like December—in terms of most new inflows, garnering Rs 2,073 crore.

Large cap, large and mid-cap, mid-cap and focused funds received net inflows of about Rs 1,700-1,900 crore each. Multi-cap funds, which were at the top position in December thanks to three new fund offers, mopped up only Rs 891 crore in January. Tax-saving schemes mobilised a tad more than Rs 800 crore.

Among hybrid funds, balanced advantage schemes retained their pole position with net inflows of Rs 2,763 crore in January. Balanced advantage funds have been an investor favourite in recent months as equity markets trade at record highs. Aggressive hybrid funds got net inflows of Rs 1,540 crore.

Index funds mopped up Rs 4,914 crore thanks partly to NFOs by the Nifty Next 50 funds by Axis MF and Navi as well as the Sensex Index fund by UTI MF. Other ETFs recorded net inflows of Rs 4,009 crore.

Among debt funds, only a handful of categories received significant net inflows. Overnight funds recorded net inflows of Rs 19,357 crore while money market schemes got Rs 4,718 crore. Ultra short duration funds and floater funds were at the third and fourth spots, respectively.

MF categories with most outflows

Gold exchange-traded funds recorded net outflows of Rs 451 crore while equity savings was the only hybrid MF category to lose money—about Rs 28.5 crore—in January.

Among debt funds, 11 of the total 16 categories recorded net outflows. This could be because investors shuffled their portfolios in anticipation of a rise in interest rates in coming months.

Liquid funds recorded highest net outflows of Rs 14,398 crore. This was followed by short-duration schemes with outflows of Rs 2,888 crore, banking and PSU funds with net outflows of Rs 2,537 crore and low-duration funds with net outflows of Rs 1,963 crore.

Also read: MF Update: January 2022 AUM is Rs 38.01 lakh crore