Equity Inflow in Mutual Funds At Record High

Equity-oriented mutual fund schemes saw highest net inflows in this financial year with Rs 25,076.71 crore in December despite correction in markets due to uncertainty led by the Omicron variant of Covid. “The year has seen remarkable growth in mutual funds with hike in inflows across all categories of funds. From an average AUM (assets under management) of Rs 30,96,274 crore in December 2020 to Rs37,72,696.31 crore in December 2021, year-on-year growth of 26 per cent has set the ball rolling for (the) mutual Fund industry in 2022,” says N.S. Venkatesh, CEO, Association of Mutual Funds in India (Amfi).

Systematic investment plan (SIP), which allows you to invest in mutual funds on a regular basis, also saw a robust inflow in the month of December. The contributions through SIP rose to a historic peak of Rs11,305.34 crore from Rs 11,004.94 crore in previous month.

The increasing trend in equity inflow is despite correction in the equity market. Experts attribute these inflows to investors’ faith in resilient growth in the Indian economy. “SIP has been the favourite medium of consistent investing and disciplined mode of savings by the common man. This is evident from the number of accounts rising. Through regular financial literacy, retail investors now understand the nuances of managing market volatility and risk adjustment through SIP. Overall, 2021 has ended in a rise in disciplined investing (seen) through the rise in number of SIP investments,” adds Venkatesh.

How Different Categories Did

In the equity category, multi-cap schemes saw the highest inflow of Rs 10,516.32 crore, followed by thematic and sectoral funds with Rs 3,769.75 crore. The higher inflows into the multi-cap fund category could be attributed to the slew of new fund offers (NFOs). Three NFOs in this category from three fund houses—Axis Multi Cap Fund, HDFC Multi Cap Fund and IDFC Multi Cap Fund—garnered Rs 9,509 crore. Flexi-cap funds, which saw the highest collection in November, remained at number three position in December with inflow of Rs 2,408.64 crore.

Debt funds saw net outflow of Rs 49,154 crore for the same period. All sub-categories of debt funds saw outflows, except Overnight Funds and Dynamic Bond Funds.

Among hybrid schemes, balanced advantage schemes once again saw the highest inflow of Rs 3,792.55 crore in the month of December.

Flood Of NFOs

A total of 19 NFOs were launched in December 2021. All the NFOs together garnered Rs 20,166 crore for the same period. Among passively-managed funds, four index funds and six exchange-traded funds (ETFs) were launched. The four index funds collectively managed to garner Rs161 crore while the six ETFs collected Rs 6,409 crore. This clearly shows the rising popularity of ETFs among the new generation of investors.

The overall mutual fund industry saw an outflow of Rs 4,350.03 crore in December, compared with Rs46,165.16 crore inflow in November last year. Net AUM as on December 31, 2021 was Rs 37,72,696.31 crore, and the average AUM (AAUM) was Rs 37,91,810.92 crore.