Equity mutual funds’ inflow drops 9 pc to Rs 37,113 cr in July; industry AUM touches Rs 65 lakh cr

New Delhi, Aug 9 (PTI) Inflow in equity mutual funds declined 9 per cent month-on-month to Rs 37,113 crore in July owing to the drop in fund infusion in large-cap, small- and mid-cap categories.

Despite the dip, the quantum of net inflows witnessed in July was the second highest flows ever received in a month. Also, this was second only to the flows of Rs 40,608 crore received in June.

The latest flow also marks the 41st consecutive month of net inflows in equity funds, data with the Association of Mutual Funds in India (AMFI) showed on Friday

Moreover, monthly contributions from Systematic Investment Plan (SIP) rose to an all-time high of Rs 23,332 crore in July as against Rs 21,262 crore in the preceding month.

This reflects the growing financial discipline among retail investors, helping them build wealth systematically over time, Venkat Chalasani, Chief Executive, AMFI, said.

Overall, the mutual fund industry has witnessed an inflow of Rs 1.9 lakh crore in the month under review as compared to an outflow of Rs 43,637 crore in June. The inflow was due to investment in equity as well as debt schemes.

With these inflows, the industry’s net assets under management rose to an all-time high of Rs 65 lakh crore in July-end from Rs 61.15 lakh crore in June-end.

“The share of financial assets has been increasing rapidly and within financial assets, mutual fund market share is relatively high. Mutual funds play a key role in enabling wealth creation for individual investors and providing tools for long-term financial planning. I am sure that the mutual fund industry will surpass the milestone trillion AUM and 100 million investors in the next 3 to 4 years; time,” Hitesh Thakkar, Acting CEO of ITI Mutual Fund, said.

According to the data, except for the focused and equity-linked saving schemes (ELSS) categories, all the other categories witnessed good net inflows.

“Inflows into equity mutual funds witnessed a dip after two months of record surges, as the flows in the large-cap category slumped by 31 per cent Rs 670.12 crore. Equity inflows declined by 8.61 per cent MoM to stand at Rs 37,113.39 crore in July backed by a decline in the flows for small & mid cap category as well (witnessed a MoM fall of 7 per cent to Rs 1,644 crore & 35 per cent to Rs 2,109 crore respectively),” Jean Christophe Gougeon, Director & Chief Marketing Officer, Sharekhan by BNP Paribas, said.

Feroze Azeez, Deputy CEO, Anand Rathi Wealth Ltd, said the decline was partially fuelled by shift from PMS to mutual funds due to change in taxation.

Within the equity schemes, sector or thematic funds attracted investors with the highest net inflows of Rs 18,386 crores during the month. However, flow in the segment was less compared to Rs 22,352 crore in June. This suggests that the previous surge was likely driven by speculation, Azeez said.

Sector or thematic funds was followed by the multi-cap category that witnessed inflow of Rs 7,084 crore, Flexicap (Rs 3,052 crore, Large & Midcaps (Rs 2,622 crore) and Value (Rs 2,170 crore).

After substantial outflows of over Rs 1 lakh crore from debt-oriented schemes in June, typically influenced by quarter-end dynamics, the trend reversed in July, with the segment experiencing net inflows of Rs 1.2 lakh crore. These inflows were largely on expected lines and aligned with historical trend.

The liquid fund category, which bore the brunt of the outflows in June with a significant net outflow of Rs 80,354 crore, saw the highest inflows during the month under review to Rs 70,061 crore.

This reversal can be attributed to corporates and businesses redeploying their excess short-term assets into these funds, Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Research India, said.

Other categories with a maturity profile of less than a year also experienced net inflows, likely reflecting a preference for safety in debt allocation among investors.

Moreover, broadly the uncertainty surrounding the commencement of the interest rate cut cycle continues. This has prompted investors to focus on investing in categories having maturity profile of less than a year, as well as categories such short duration and corporate bond funds, he added.