SIPs hit fresh high at Rs 19,187 cr

Total outflows of the mutual fund industry stood at Rs 1.6 lakh crore in March due to quarter ending advance tax payments and higher valuations in mid- and small-cap space

New Delhi: Systematic Investment Plan (SIP) monthly inflow rose to a fresh high of Rs19,270 crore during the month under review from Rs19,187 crore in February. Total SIP contribution stood at Rs2 lakh crore, an uptick of 28 per cent over the previous year. Hybrid funds attracted Rs5,584 crore in the last month of 2023-24. Debt mutual funds, on the other hand, saw an outflow of Rs 1.98 lakh crore in March. Total outflows of the mutual fund industry stood at Rs 1.6 lakh crore in March due to quarter ending advance tax payments and higher valuations in mid- and small-cap space. MFs had seen a total pull out of Rs1.2 lakh crore in preceding month, Gopal Kavalireddi, Vice President of Research at FYERS, said.

Equity mutual funds (MFs) ended the financial year 2023-24 on a positive note with a net inflow of Rs22,633 crore in March, propelled by huge interest for thematic funds and launch of new fund offerings (NFOs). However, the latest flow was 16 per cent lower compared to an infusion of Rs26,866 crore seen in the preceding month, data with the Association of Mutual Funds in India (AMFI) showed on Wednesday.

The outflow has pulled down the industry’s assets under management (AUM) to Rs53.4 lakh crore last month from Rs54.54 lakh crore in February-end. However, for the financial year 2023-24, the AUM surged 36 per cent, capturing the buoyancy in equities. In the equity segment, all categories experienced inflow in March, barring small cap funds, which aw an outflow of Rs94 crore. Moreover, the flow in March marks the 37th consecutive month of net inflows in equity funds.

The equity segment was also aided by five new fund launches during the month which cumulatively garnered Rs3,074 crore. All these new launches belonged to the sectoral or thematic category, Melvyn Santarita, Analyst at Morningstar Investment Research India, said. Within the equity asset class, the sectoral or thematic funds category saw the highest inflows to the tune of Rs7,918 crore. However, the small-cap category witnessed a net outflow of Rs94 crore, making it the first outflow since September 2021. Moreover, in the mid-cap category, net investment dropped to Rs1,018 crore in March from Rs1,808 crore in the preceding month.

“The stress test results in the small and mid-cap space coupled with high valuations could be the reason for flows to ebb here,” Jean Christophe Gougeon, Director & Chief Marketing Officer at Sharekhan, by BNP Paribas, said.

Investors seem to have found solace in large cap funds as the category witnessed an inflow of Rs2,128 crore in March from Rs921 crore in the preceding month. Recently, Sebi mandated asset management companies (AMCs) to disclose the stress test results for the midcap and small cap funds every 15 days. The purpose of the stress test was to ascertain how soon fund managers can liquidate their portfolios if investors were to rush for redemptions under adverse market conditions.

This has possibly led to some concerns among investors. Additionally, some fund houses stopped taking lumpsum investments and opted only for the SIP option for further investments in their small cap and mid-cap funds. This approach could be possible due to concerns regarding high valuation in these segments, Morningstar’s Santarita said. Of Rs2 lakh crore outflow in debt schemes, liquid funds witnessed the highest net outflows of Rs1.70 lakh crore. Additionally, Long Duration Fund, Banking and PSU Fund and Gilt Fund with 10-year constant duration were the three categories which witnessed net inflows.