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August was a good month for the MF industry with AUM of the industry reaching all time high at Rs.47 lakh crore.
Of the total AUM, over 50% or Rs.24 lakh crore is in equity, hybrid and solution-oriented schemes where majority of retail investors invest their money.
In terms of flows, the industry has witnessed net inflows of over Rs. 16,000 crore in August. The industry collected Rs.7500 crore from the NFOs.
Let us look at the key data points of August 2023:
Equity inflows at over Rs.20,000 crore
The industry has received net inflows of Rs.20245 crore in equity schemes. A good portion of this inflows or Rs.7300 crore has come from equity NFOs.
Among scheme categories, the sectoral funds have seen highest inflows of Rs.4,800 crore. Small cap funds continue to receive good inflows at Rs. 4,265 crore.
Further, multi cap funds and flexi cap fund have recorded inflows of over Rs.2000 crore in August.
Outflows from debt funds
Debt funds have witnessed net outflows of Rs.26000 crore largely due to liquid funds. The category saw outflows of Rs.27000 crore in August.
Categories which have witnessed net inflows were overnight funds (Rs.3100 crore), floater funds (Rs.2320 crore) corporate bond funds (Rs.1755 crore), gilt fund (Rs.255 crore), long duration (Rs.180 crore), dynamic bond (Rs.135 crore) and money market (Rs.92 crore).
Hybrid funds record increase in inflows
Total inflows in hybrid funds increased from Rs.12,421 crore in July 2023 to Rs 17,082 crore in August 2023. All categories in hybrid funds have received net inflows.
Arbitrage funds have received the highest net inflows to the tune of Rs 9,483 crore. Dynamic asset allocation fund/balanced advantage fund followed arbitrage funds with inflows of Rs.3,600 crore.
Index funds and ETF net flows improve
Index funds have continued the positive trend by showing net inflows of Rs.1,986 crore, an increase from last month’s inflows of Rs 1,179 crore.
Net inflows in ETFs (gold and others) have turned positive in August with Rs. 2,920 crore. Interestingly, gold ETFs gained traction as net inflows increased from Rs.456 crore in July to Rs.1,028 crore in August.
Folio count and SIP AUM increase
- With addition of 28.20 lakh new folios, the mutual fund industry now stands at 15.42 crore folios. Majority of these folios are from retail investors
- The MF industry has recorded SIP AUM of Rs. 8.47 lakh crore with the addition of 35.92 lakh new SIPs. In fact, the gross SIP inflows have increased to Rs. 15,813 crore in August 2023
- The number of SIP accounts have increased to 6.97 crore in August 2023 compared to 6.81 crore in July 2023
Experts views
NS Venkatesh, CEO, AMFI
It is very heartening to see that Indian retail investors continue to invest in the equity markets via the mutual fund route, especially through SIP. The record SIP contribution is a testimony of the Indian investors long term approach to building wealth by investing through small ticket sized SIPs. Economic growth is expected to improve, and the markets are expected to grow.
Manish Mehta, National Head, Sales, Marketing & Digital Business, Kotak Mahindra MF
Sell on market high and purchase on lows was seen in this August’s higher equity net sales. This was also aided by collections through a few NFOs in equity and hybrid category.
Kislay Upadhyay, smallcase manager and Founder of FidelFolio Investments
Active equity funds once again outshine debt and passive equity funds, continuing to be retail investors preference in the current bull run. Retail investors are displaying more mature behaviour through two notable trends- a strong preference for SIP and an increased allocation to equity. It is interesting to observe that identical behaviour is exhibited by large and small investors, as can be inferred from mirror trends in number of folios and net inflows. This suggests a widespread shift towards active equity funds and a growing maturity in investment strategies across the investor spectrum.
