Summary of this article
Pace of total inflows into mutual funds reduced in Febraury
Equity mutual funds showed 8 per cent rise in February, inflows into debt funds also rebounded
Inflows into equity mutual funds rose to Rs. 25,978 crore in February, rising 8 per cent from January, data from Association of Mutual Funds in India (Amfi), showed. However, the pace of inflows into the mutual fund industry as a whole slowed down to Rs. 94,543 crore in February, from Rs. 1.56 lakh crore in the month of January.
The rise in inflows into equity mutual funds suggests that investors continued to opt for equity schemes despite market volatility. While some categories slacked in inflows, many others showed a rebound and the mutual fund industry continued to remain in a net positive zone indicating continued investor interest.
Across passive funds including index funds, exchange traded funds (ETFs) and other overseas funds, total inflows were at Rs. 13,879 crore in February, sharply down from the record flows of Rs. 39,954 crore in January. Debt mutual funds recorded a net inflow of Rs. 42,106 crore in February, also sharply down from Rs. 74,827 crore seen in the previous month. However, overall flows in the category remained positive after recovering in January from heavy outflows seen in December. The data showed that investors continued to allocate a portion of their funds in fixed income, though the pace slowed down.
Meanwhile, hybrid schemes saw inflows of Rs. 11,983 crore, lower than Rs. 17,356 crore in January. ‘Other schemes’, which include ETFs, saw inflows of Rs. 13,879 crore, nearly three times lower than the inflows seen in January. Inflows into solution-oriented schemes, such as retirement and children’s funds, reduced marginally to Rs. 247 crore in February, from Rs. 341 crore in the previous month.
Gold ETFs also continued to garner investor interest, but the pace softened. Gold ETFs saw net inflows of Rs. 5,255 crore, sharply falling from a record inflow of Rs. 24,040 crore in January. While the inflows slowed, the category continued to see investors allocating part of their portfolios to gold.
Among equity funds, flexi–cap funds continued to contribute the most, with inflows worth Rs. 6,925 crore in February. Mid-cap and small-cap funds recorded stronger inflows in February, attracting Rs. 4,003 crore and Rs. 3,811 crore, respectively, in their categories. Large-cap funds also recorded a rise in inflows during February, receiving Rs. 2,112 crore. Large-cap and mid-cap funds in total attracted Rs. 3,138 crore in February, similar to the previous month. Meanwhile, multi-cap funds saw inflows of Rs. 1,934 crore.
Sectoral and thematic funds saw inflows nearly double to Rs 2,987 crore in February. However, inflows into focused funds reduced to Rs. 901 crore ,from Rs. 1,557 crore in January.
"The interest in equity markets and investment products continues. Though the markets have been volatile because of geo-political situation however the investors have become more aware about valuation corrections and thus SMID continue to attract flows...However, after a massive January Gold ETF flows, it appears that some money is rotating back to equities because of equity price corrections...Despite February having fewer days which slightly impacted the SIP, the underlying sentiment remains robust with folio growth," Vaibhav Chugh, chief executive officer at Abakkus Mutual Fund, said.
