Equity Mutual Fund Inflows Slowed in September Quater, Small-Cap Funds Still Continue to Attract Investors
In September 2024, open-ended equity mutual fund inflows declined 10% month-on-month and stood at Rs.34,419 crore. According to a report released by the Association of Mutual Funds of India (AMFI) on October 10, this is due to the lower demand for large-cap funds. Open-ended equity inflows are, however, positive for the 43rd successive month.
Equities markets have so far had a strong September even as flows have moderated. The Sensex and Nifty were up 2.4% and 2.3% respectively, their biggest rise since July 2024. But such was not the case with equity flow momentum.
Meanwhile, Systematic Investment Plans (SIPs) continued to reach new heights. Monthly SIP contributions hit an all-time high of Rs.24,508.73 crore in September, up from Rs.23,547.34 crore in August 2024. Additionally, the SIP Assets Under Management (AUM) stood at a record Rs.13.82 lakh crore for the month of September, compared to Rs.13.39 lakh crore in August 2024.
The growth in the mutual fund industry was further highlighted by a rise in the number of distinct investors, which reached a milestone of 5 crores. The folio count also surpassed 21 crores, marking the perseverance pursued throughout the country to raise financial awareness.
Equity Fund Trends
Large-cap funds, the equity fund category witnessed a 33% decline in inflows, which fell to Rs.1,769 crore in September. Small-cap funds, however, continued to attract money once again at Rs.3,071 crore but for the tenth month in a row. That is, yet again, lower than the Rs.3,209.33 crore against the previous month. Mid-cap funds remained flat at Rs.3,130 crore in net inflows as well.
Multi-cap funds saw the highest gains in the equity segment, where net inflow stood at 42% against the same period last year, taking the flow to Rs.3,509 crore. Multi-cap funds invest at least 25% in large, mid and small-cap stocks, thus providing a balanced approach to investors.
Sectoral and Thematic Funds
Sectoral and thematic funds, which had witnessed humongous inflows for the past year, saw net investments decline by 27% to Rs.13,255 crore. Fund mobilization through NFOs in the sector, however, remained strong, the September 2024 number stayed at Rs.10,202 crore.
Debt Funds and Overall Outflows
Debt mutual funds witnessed huge net outflows of Rs.1.14 lakh crore in September in the fixed-income space. Outflows were most likely driven by advance tax requirements that corporates needed to meet at the quarter’s end. Short-term debt fund categories bore the brunt of these outflows, with liquid funds witnessing the maximum net selling at Rs.72,666 crore. Money market and overnight funds too faced net outflows of Rs.23,421 crore and Rs.19,363 crore, respectively.
Some buying was seen in corporate bond funds, gilt funds, and long-duration funds during the month, however.
Overall open-ended mutual funds witnessed net outflows of Rs.71,027 crore during September, far from net investments of Rs.45,169.36 crore witnessed the previous month because of heavy selling in debt funds.
The outflows, however, continued unabated. The net assets under management grew marginally to Rs.67.09 lakh crore at the end of September 2024 from Rs.66.70 lakh crore in August.
