India's mutual fund industry sees record inflows in July: Equity and debt schemes thrive
Equity mutual funds
raked in ₹42,702 crore in July - the highest contribution in a month - boosted by strong appetite for midcap, smallcap and new sectoral fund offerings.
Systematic Investment Plan
(SIP) collections were also at a record ₹28,464 crore compared with June's ₹27,269 crore, while debt funds saw flows surge to ₹1.07 lakh crore, led by investor interest in liquid and money market funds.
The mutual fund industry's average AUM rose 2.6% to ₹76.74 lakh core from ₹74.79 lakh crore in June. Money pumped into equity schemes in July - the 53rd straight month of net inflows - surged 81% from June's ₹23,587 crore.
"High returns from equities over the last three and five-year periods, low interest rates on bank deposits and high HNI appetite for diversified portfolios beyond direct equity are driving strong flows into equity mutual funds," said A Balasubramanian, MD and CEO, Aditya Birla SL Mutual Fund.
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In equity schemes, investors allocated money across categories, with the highest amounts going into sectoral and thematic funds. They got ₹9,426 crore in July compared with a mere ₹475 crore in the previous month, buoyed by new fund offers (NFOs) from large AMCs such as Axis Services Opportunities Fund, HDFC Innovation Fund and ICICI Prudential Active Momentum Fund.
Investors put ₹7,654 crore into flexicap funds, up from ₹5,733 crore in June. This was followed by large flows into smallcap funds, which got ₹6,484 crore against ₹4,025 crore in June, and midcap funds, which got ₹5,182 crore against ₹3,754 crore in the previous month. In the fixed-income space, liquid, money market and overnight funds had inflows of ₹39,355 crore, ₹45,474 crore and ₹8,866 crore, respectively largely due to NFOs from Jio BlackRock MF in these categories.
Agencies
Fixed-income Portfolios
As institutional investors look to earn slightly more on their fixed-income portfolios, they are allocating more to money market funds over liquid funds, which have a marginally higher maturity than money market funds.
"Fixed income is changing colour, with liquid funds seeing strong competition from money market funds," said Anand Varadarajan, chief business officer, Tata Mutual Fund.
The hybrid category that invests in a mix of two or more assets, saw net inflows of Rs 20,879 crore, lower than the previous month's Rs 23,223 crore.
"The dip in hybrid fund flows hints that investors are prioritising either aggressive equity plays or safe debt alternatives," said Ankur Punj, MD and national head, Equirus Wealth.
Flows into arbitrage funds halved to Rs 7,296 crore from Rs 15,585 crore in the previous month, as spreads narrowed due to falling interest rates, putting pressure on returns.
On the other hand, multi-asset allocation funds that invest in a mix of equity, debt and gold saw inflows rise 93% to Rs 6,197 crore from Rs 3,210 crore in June, backed by a Franklin Templeton NFO. Balanced advantage funds saw inflows of Rs 2,611 crore compared with Rs 1,886 crore in the previous month.
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