Mutual funds witnessed net outflows of Rs 1.33 lakh crore in September, compared with net inflows of Rs 41,353 crore in August, as heavy withdrawals from fixed-income schemes more than offset stronger inflows into equity mutual funds, according to the latest data released by the Association of Mutual Funds in India (AMFI).
Equity Mutual Fund Inflows Rise 31%
Equity mutual fund schemes recorded net inflows of Rs 38,307 crore in September, up around 31% from Rs 29,329 crore in August.
Small-cap funds attracted Rs 9,039 crore, compared with Rs 7,973 crore in the previous month. Mid-cap funds received inflows of Rs 7,835 crore, up from Rs 6,989 crore in August, while flexi-cap funds attracted Rs 6,702 crore against Rs 5,059 crore previously.
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Large-cap funds also returned to positive territory, recording inflows of Rs 859 crore in September compared with outflows of Rs 1,147 crore in August.
Sectoral and thematic funds attracted Rs 3,640 crore, more than double the Rs 1,713 crore recorded in the previous month.
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Equity AUM Falls Despite Higher Inflows
Despite stronger net inflows, assets under management (AUM) of equity mutual fund schemes declined 4.3% month-on-month (MoM) to Rs 37.54 lakh crore.
Equity fund redemptions fell 17.5% to Rs 36,525 crore, while gross sales increased just 1.7%, indicating that the rise in net inflows was driven primarily by lower redemptions rather than a substantial acceleration in fresh investments.
SIP Contributions Hit Record High
Systematic Investment Plan (SIP) contributions reached a record Rs 32,490 crore in September, marginally higher than Rs 32,297 crore in August.
The record contribution also stood in contrast to the sharp withdrawals from debt-oriented schemes.
According to Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India, a key highlight was the continued preference for mid- and small-cap funds.
“The sustained interest in these categories, despite the correction in broader markets, suggests that investors continue to remain confident about the long-term growth potential of emerging businesses,” said Srivastava.
However, given the elevated valuations in certain pockets of the market and the inherently higher volatility associated with these segments, investors need to remain mindful of the risks involved, he added.
Debt Funds Record Outflows
Fixed-income mutual funds recorded net outflows of Rs 1.83 lakh crore in September, sharply higher than the Rs 8,127 crore withdrawn in August. The outflows were concentrated in short-term debt categories, including liquid and money market funds.
Liquid funds saw net outflows of Rs 95,743 crore in September, compared with inflows of Rs 19,934 crore in August. Money market funds recorded outflows of Rs 50,846 crore, reversing inflows of Rs 11,735 crore in the previous month.
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Gold, Silver ETFs Attract Investor Money
Exchange-traded funds (ETFs) attracted Rs 15,501 crore in September, up around 53% from Rs 10,161 crore in August.
Gold ETFs recorded inflows of Rs 4,451 crore, compared with Rs 2,597 crore in the previous month. Silver ETFs attracted Rs 1,974 crore, up from Rs 1,271 crore in August.
Equity ETFs also saw stronger inflows, rising to Rs 9,960 crore from Rs 7,237 crore in August.
Meanwhile, multi-asset allocation funds recorded inflows of Rs 3,667 crore, broadly unchanged from Rs 3,671 crore in August.
Mutual Fund Industry AUM Falls 5%
The mutual fund industry's total assets under management (AUM) declined 5% MoM to Rs 82.64 lakh crore in September from Rs 87.08 lakh crore in August.
Hybrid mutual fund schemes swung to net outflows of Rs 457 crore in September from inflows of Rs 10,045 crore in August. Arbitrage funds recorded outflows of Rs 3,956 crore, reversing inflows of Rs 3,789 crore in the previous month.
“Overall, the September numbers reinforce the structural strength of domestic participation in equity mutual funds. However, the continued concentration of flows into mid- and small-cap categories warrants attention, particularly given valuation concerns in parts of the broader market,” said Srivastava.
With geopolitical uncertainties, global interest-rate developments and foreign investor flows likely to remain important influences on market sentiment, maintaining investment discipline, adequate diversification and a long-term perspective remains essential, he added.
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