Equity mutual fund inflows slump 9% in July, small-caps defy trend with strong ₹2,109 crore: AMFI

In July, open-ended equity mutual funds saw a decrease in inflows by 8.61%, amounting to ₹37,113.39 crore, according to the Association of Mutual Funds of India (AMFI) report released on August 9.

This dip is linked to a reduction in investments across both large-cap and mid-cap funds. Despite this decline, open-ended equity funds have continued to experience positive inflows for the 41st consecutive month.

Milestone achievement for AUM

In July, the mutual fund industry's net assets under management (AUM) reached an impressive ₹64,96,653.14 crore, according to recent data. This marks a notable increase, surpassing the ₹60 lakh crore milestone for the first time, which was achieved in June.

NFO highlights

In July, approximately 15 new fund offers (NFOs) were introduced, collectively raising ₹16,565 crore. Among these, sectoral and thematic funds led the way with a substantial contribution of ₹9,790 crore. Notably, only two sectoral funds were launched during the same period.

SIP investment boost

According to the most recent figures from AMFI, there was a notable increase in monthly systematic investment plan (SIP) investments, climbing from ₹21,262 crore in June to ₹23,332 crore in July.

Large-cap funds experienced a significant decline in inflows, falling by 31 percent to ₹670.12 crore. Both mid-cap and small-cap funds also faced a slowdown in new investments.

Nonetheless, small-cap funds still attracted net inflows of ₹2,109.20 crore, while mid-cap funds garnered ₹1,644.22 crore in fresh investments for the month.

In a notable shift in the investment landscape, hybrid funds saw a substantial increase in inflows, reaching ₹17,436 crore in July, a significant jump from ₹8,855 crore recorded in June. This surge underscores growing investor confidence in diversified portfolios that blend equity and debt.

Liquid funds experienced a dramatic turnaround, attracting ₹70,060.8 crore in July, reversing the trend of outflows observed the previous month, which had totaled ₹80,354 crore. This shift indicates a renewed interest in these low-risk, highly liquid investment options.

Exchange-traded funds (ETFs) saw a decline in inflows, amounting to ₹5,787.3 crore, compared to ₹9,134 crore in June. This drop suggests a cooling period for ETF investments, potentially influenced by changing market conditions.

Sectoral and thematic funds saw inflows of ₹18,386.3 crore, although this was a decrease from the previous month's inflow of ₹22,352 crore. The decrease suggests a possible recalibration of investor focus within specific sectors and themes.

Corporate bond funds experienced a turnaround, with inflows of ₹2,261 crore in July, contrasting with the ₹3,469 crore outflow seen in June. This reversal highlights renewed investor interest in corporate debt securities.

Dividend funds also saw increased inflows, recording ₹631 crore in July, up from ₹520 crore the previous month. This rise points to a growing appetite for funds that provide regular income through dividends.

Equity-linked savings schemes (ELSS) faced increased outflows, totaling ₹637.6 crore in July, up from ₹445 crore in June. This trend indicates a potential shift away from tax-saving equity investments.

Credit risk funds experienced a modest outflow of ₹542.8 crore in July, widening from the ₹478 crore outflow recorded in June. This continued outflow reflects cautious sentiment towards funds with higher credit risk.

Overall, these movements reflect a dynamic shift in investor preferences and market conditions, highlighting the need for continuous adaptation and strategic planning in investment approaches.