42 months & counting! India puts more money into equity funds

Investors continued to pump money into equity mutual funds through a mix of lump sum investments in new fund offers (NFOs) and systematic investment plans (SIPs). Equity schemes garnered ₹38,239 crore in August – the 42nd straight month of inflows – as against ₹37,113 crore in the previous month led by flows into thematic funds, a category that has witnessed a flood of new fund offers in recent months.

Flows through SIPs into mutual funds inched up to ₹23,547 crore – the highest ever in a month – compared to ₹23,332 crore in the previous month.

Debt funds too saw inflows of ₹45,169 crore largely from overnight, liquid and money market funds. The total average assets under management (AUM) of the industry surged to a new high of ₹66.04 lakh crore from ₹64.71 lakh crore in July.

In August, the mutual fund industry launched 16 equity funds and two debt schemes. New fund offers (NFOs) of sectoral and thematic schemes such as Bank of India Business Cycle Fund, Invesco India Manufacturing Fund, Motilal Oswal Manufacturing Fund, Motilal Oswal Business Cycle Fund and SBI Innovative Opportunities Fund among others got ₹18,117 crore.

“New themes trying to benefit from government reforms offer an opportunity to participate through tactical allocation,” said Akhil Chaturvedi, executive director, Motilal Oswal Mutual Fund.Among equity schemes, multicap funds, which invest in a mix of large, mid- and small-cap funds, saw inflows of ₹2,475 crore, while flexicap schemes garnered ₹3,513 crore. Large caps gathered ₹2,637 crore.Flows in mid- and small-cap funds rose again with mid-caps garnering ₹3,055 crore compared with ₹1,644 crore in the previous month. Small-cap schemes received ₹3,209 crore compared to ₹2,110 crore in July.

In the hybrid space, flows into arbitrage funds, a product investors have been using to park idle money, shrunk to ₹2,372 crore from ₹11,015 crore the previous month, as returns came under pressure after spreads witnessed contraction. Multi asset allocation funds, which invest in a mix of debt, equity and gold, saw inflows of ₹2,827 crore. Balanced advantage funds saw inflows of ₹3,215 crore and equity savings funds saw inflows of ₹1,456 crore.

Gold ETFs saw inflows of ₹1611 crore as the lack of fresh sovereign gold bond (SGB) issuances in this financial year prompted investors to look at alternatives.