Mutual fund inflows plunge 43% amid sharp drop in debt schemes

Mutual fund inflows dropped sharply by 43% in August to ₹1.08 lakh crore compared with ₹1.89 lakh crore in July, according to the latest AMFI data. The decline was driven by a significant 62% decrease in net flows into debt-oriented schemes, which fell to ₹45,169 crore from ₹1.19 lakh crore the previous month.

The steepest decline in net inflows among debt-oriented schemes was seen in floater funds, which plummeted by over 315% compared to last month. Meanwhile, equity mutual fund net flows rose by 3% in August, reaching ₹38,239 crore compared to ₹37,113 crore in July, driven by a 293% surge in large-cap fund inflows to ₹2,636 crore in August from ₹670 crore in July.

“We are interestingly seeing investors balancing their asset allocation in favour of large-cap, Multicap and flexi-cap funds. Given the run-up in mid and small-cap space, managing risk is paramount today and from that perspective, this is a good development,” said Akhil Chaturvedi, executive director and chief business officer, Motilal Oswal AMC.

“Large-cap funds also attracted significant investments this month, alongside strong inflows across mid-cap and small-cap categories, reflecting robust investor confidence in the broader market,” said Pankaj Shrestha, Investment Services Head, PL Capital - Prabhudas Lilladher. “Notably, this marks the 42nd consecutive month of positive equity inflows,” added Shrestha.

Small-cap funds attracted inflows of ₹3,209 crore, while dividend yield funds saw the lowest inflow at ₹499 crore, marking a 21% drop from ₹630 crore in July. Hybrid schemes recorded a 43% decline in net inflows, falling to ₹10,005.30 crore from ₹17,436.09 crore in the previous month.

The steepest decline in net inflows among debt-oriented schemes was seen in floater funds, which plummeted by over 315% compared to last month.

All categories except for ELSS and focused funds have continued to receive inflows in August. ELSS funds and focused funds have continued to witness outflows for the fifth straight month. In August, ELSS funds and focused funds saw outflows of ₹205 crore and ₹83 crore, respectively.

In August 2024, 18 new schemes were launched, all under the open-ended category, raising a total of ₹13,815 crore.

“Thematic funds through NFOs are also garnering high inflows, new themes trying to benefit from government reforms also offer the opportunity to participate through tactical allocation. SIPs continue to grow about 1% every month, this is very healthy for the long-term growth of the industry and investors to increase their equity allocation in a disciplined way,” added Chaturvedi

The average assets under management for August 2024 stood at ₹66.04 lakh crore, up from ₹64.71 lakh crore in July 2024. Meanwhile, mutual fund folios reached an all-time high of 20.45 crore in August 2024.

Retail AUM that combines Equity, Hybrid, and Solution-Oriented Schemes rose to ₹39.28 lakh crore in August, a 2.5% increase from ₹38.31 lakh crore in July. In August 2024, 63.94 lakh new SIPs were registered, with SIP contributions hitting an all-time high of ₹23,547.34 crore, up from ₹23,331.75 crore in July. The number of SIP accounts also reached a record high of 9.61 crore in August, compared to 9.34 crore in July 2024.