Equity Mutual Fund Inflows Drop 14% in November Due to Market Instability and Global Concerns
Net inflows into equity mutual funds dropped by 14% in November 2024, falling to Rs.35,943.49 crore from Rs.41,886.69 crore in October. This happened because of weak global signals and increased market instability. Equity fund inflows have remained above Rs.30,000 crore every month since May 2024, continuing a 45-month streak of growth since March 2021, despite the drop.
On the debt side, inflows were much lower, totalling just Rs.12,915 crore in November, compared to a record Rs.1,57,402.30 crore in October.
The total value of assets in the mutual fund industry was Rs.68 lakh crore in November, up from Rs.67.25 lakh crore in October and Rs.49.04 lakh crore in November 2023. SIP contributions in November were Rs.25,319.66 crore, a bit lower than Rs.25,322.74 crore in October. In addition, 18 new open-ended schemes were launched, raising Rs.4,052 crore.
A combination of macroeconomic factors, geopolitical uncertainties, and the ongoing US election contributed to a decline in inflows. Investors kept a cautious approach and waited for clarity on these fronts, which was reflected in a reduction in lump sum investments and a modest change in SIP inflows.
Thematic funds, which had constituted 21% of the inflows in equity-oriented schemes, fell by 37% month-on-month. With a correction of 5-6% in domestic equity markets in October with large outflows by FIIs and with the US and several Indian state elections ahead, most investors were seen on the sidelines.
Large-cap and sectoral funds saw a decrease in inflows of 26.20% and 37.63%, respectively, but small-cap and mid-cap funds grew. Small-cap funds increased by about 9%, while mid-cap funds saw a rise of 4.3%. Experts believe that small-cap and mid-cap funds will continue to be popular with investors in the coming months because they offer good opportunities.
SIP (Systematic Investment Plan) inflows remained strong, with monthly contributions staying above Rs.25,000 crore. This shows that investors are still committed to their long-term financial goals, even with the ups and downs in the market.
