Despite volatility in the stock markets, equity mutual funds attracted Rs 15,685 crore in February, data from the Association of Mutual Funds in India (AMFI) showed on Friday, reported PTI. This was the highest net infusion in the mutual funds market in the last nine months. This is higher than Rs 12,546 crore inflow seen in January and Rs 7,303 crore reported in December 2022.
February was also the 24th straight month that saw inflows into equity-oriented mutual fund schemes. According to the report, backed by a healthy inflow into equity funds, the mutual fund industry saw an inflow of Rs 9,575 crore last month. As per the data, the total net flows in equity schemes stood at Rs 15,685 crore. This was the highest level since May 2022, when equity funds attracted Rs 18,529 crore.
Additionally, the contribution from SIP (Systematic Investment Plan) has been averaging above Rs 13,000 crore mark every month since October 2022.
According to AMFI data, thematic or sectoral funds recorded an inflow of Rs 3,856 crore within the equity funds, trailing by small-cap funds (Rs 2,246 crore) and multi-cap funds (Rs 1,977 crore). With a total flow of Rs. 6,244 crores, index funds continue to draw investors in addition to stocks. Moreover, Gold Exchange Traded Funds (ETFs) had a 165 crore rupee injection.
Gopal Kavalireddi, Head of Research at FYERS, told PTI that investors continue to invest in a disciplined manner, countering the volatility in stock markets arising out of Foreign Portfolio Investor (FPI) outflows.
“With interest rates expected to rise from the current levels, debt funds continued to witness outflows as investors churn their allocation between short and long-term funds,” Kavalireddi said.
Overall, there was a net outflow of Rs 13,815 crore from debt funds in February as opposed to Rs 10,316 crore in January. In February, withdrawals from liquid funds were the largest at Rs. 11,304 crores, followed by ultra-short-duration funds at Rs. 2,430 crore, and low-duration funds at Rs. 1,904 crores.
“With inflation coming in higher after a two-month cooldown, RBI is wary of the evolving situation and might opt to increase rates in upcoming policy meets. As the US Federal Reserve vowed to (continue with) interest rate hikes for a longer time to tame inflation, the terminal interest rate could reach 6 per cent, prompting the further flight of capital from markets outside the US,” Kavalireddi added.
According to the latest figures, the Assets Under Management (AUM) of the 42 firms in the mutual fund industry were marginally down to Rs 39.46 lakh crore at the end of February from Rs 39.62 lakh crore at the end of January.