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After several months of record inflows in small cap funds, the MF industry saw outflows from small cap funds, shows AMFI data.
Experts say this indicates that mutual funds investors have become mature as they shift focus to large cap oriented schemes like large and mid cap funds and flexi cap funds.
Akhil Chaturvedi, Chief Business Officer, Motilal Oswal MF said that the shift in trend is in line with valuation differentials among large v/s mid and small caps. It suggests that large caps/flexi cap oriented schemes may attract higher flows in the coming months.
Madhu Nair, CEO, Union Mutual Fund said that investors/distributors/advisors are preferring large cap-oriented portfolios because of perceived valuation concerns in the mid and small cap segments.
Manish Mehta, National Head - Sales, Marketing & Digital Business, Kotak Mahindra MF feels that many investors have moved from small cap funds to large cap oriented funds to rebalance their portfolio.
Overall, the FY 2024 ended on a good note for the MF industry. While the total AUM declined from Rs.54 lakh crore in February to Rs.53 lakh crore in March, the industry recorded positive net inflows across most categories and monthly SIP AUM touched all time high numbers.
Let us look at the key highlights of the month gone by:
Equity funds
Equity funds saw net inflows of over Rs.22,000 crore. Sectoral/thematic funds, large and mid cap funds and flexi cap funds received highest net inflows in March 2024.
Interestingly, small cap funds saw an outflows of close to Rs. 100 crore largely due to concerns of froth in valuations of small cap companies.
While sectoral/thematic funds received net inflows of close to Rs.8000 crore, large & mid cap funds and flexi cap funds grossed net inflows of Rs.3200 crore and Rs.2700 crore, respectively.
The AUM of pure equity schemes increased to Rs. 23.48 lakh crore in March 2024.
Debt funds
Debt schemes saw net outflows of close to Rs.2 lakh crore in March 2024. This is in line with quarterly withdrawals to meet tax commitments. As a result, the AUM of debt schemes reduced to Rs. 12.62 lakh crore in March 2024.
Liquid funds alone saw the highest outflows of over Rs. 1.50 lakh crore. Ultra short duration funds and money market funds were the other two categories with highest net outflows in March.
Hybrid funds
Hybrid funds recorded positive net inflows of Rs. 5600 crore in March 2024. Multi asset allocation funds saw the highest net inflows of Rs. 2700 crore. On the other end, arbitrage fund saw a net outflow of about Rs. 300 crore.
The AUM for hybrid funds went up from Rs. 7.10 lakh crore in February 2024 to Rs. 7.22 lakh crore in March 2024.
Index funds and ETFs
Passives funds continue to receive traction from investors. Both index funds and ETFs saw net inflows last month.
While index funds saw net inflows of Rs. 1800 crore, the net inflows in ETFs (gold and others) increased to Rs. 10,933 crore in March.
SIP and folio count
The number of mutual fund folios reached an all-time high at 17.78 crore.
Also, the number of SIPs was also at an all-time high of about 8.40 crore while the SIP AUM is at Rs. 10.71 lakh crore.
43 lakh new SIPs were registered during March 2024.
NFOs
19 new open-ended schemes collected close to Rs.4000 crore
Expert opinion on the numbers
Akhil Chaturvedi, Chief Business Officer, Motilal Oswal MF
The total assets under management (AUM) of mutual funds decreased by 2%. We observed a decline in equity inflows in March, primarily driven by the small and midcap category. This could be attributed to investors seeking relative valuation comfort, leading them to reallocate towards these segments.
Madhu Nair, CEO, Union Mutual Fund
Multi asset funds are gaining popularity and attracting flows which is a good sign as asset allocation is taking center stage. This could lead to happy outcomes for investors over long term.
In pure equity category, thematic equity funds have also seen decent flows and it shows that certain set of investors are willing to look at playing key themes which can dominate India growth story. We are quite optimistic about sustainable flows into MF industry across various categories for long periods of time.
Manish Mehta, National Head - Sales, Marketing & Digital Business, Kotak Mahindra MF
Rising market led to profit booking by investors while SIPs continue to be encouraging. Fixed income flows were negative due to outflows from short term funds. Investors continue to use SIPs to continue investing and ironing our volatility.
Venkat Chalasani, Chief Executive, AMFI
As the fiscal year draws to a close, the investor confidence in mutual funds continues. This underscores investors' unwavering commitment to disciplined wealth accumulation.
Noteworthy is the continuous positive equity inflow for 37 months in a row. Mutual funds witnessed a record asset gain of Rs.14 lakh crore in FY24, marking a 35% rise, the highest since FY21.
These trends highlight investor evolution towards financial literacy and collaborative efforts in promoting intelligent investment practices, reflecting the mutual fund industry's steady growth and lasting significance.
