Mutual fund monthly update: Equity mutual fund inflows lose steam in November amid cooling sectoral trends

Sectoral and Thematic mutual funds witness a decline in November 2024 as overall inflows drop by 14 per cent.

November saw a dip in equity mutual fund inflows, with investors showing reduced enthusiasm for sectoral and thematic funds. The latest data from the Association of Mutual Funds in India (AMFI) highlights a 14 per cent decline in actively managed equity fund inflows compared to October.

Sectoral and thematic categories, which have traditionally been major contributors, experienced a notable pullback, reflecting shifting investor preferences.

Actively Managed Equity Funds: A Mixed Performance
Actively managed equity funds recorded inflows of Rs 35,943 crore in November, down from Rs 41,818 crore in October.

Here's a breakdown of the key categories:

• Large-Cap Funds: Inflows dropped to Rs 2,547.9 crore from Rs 3,452 crore in October.
• Mid-Cap Funds: At Rs 4,883.4 crore, mid-cap funds saw a slight improvement from Rs 4,683 crore in the previous month.
• Small-Cap Funds: Inflows rose to Rs 4,111.8 crore compared to Rs 3,772 crore in October.
• Flexi-Cap and Multi-Cap Funds: Flexi-cap funds attracted Rs 5,084.1 crore, while multi-cap funds garnered Rs 3,626 crore during November.

However, sectoral and thematic funds experienced a sharp decline, with inflows shrinking to Rs 7,657.7 crore from Rs 12,278 crore in October.

SIP Contributions Remain Steady
Systematic Investment Plans (SIPs) continued to display robust participation, with contributions reaching Rs 25,320 crore in November, slightly down from Rs 25,322.74 crore in October.

Despite the marginal dip, SIPs remain a cornerstone of consistent retail participation in mutual funds.

Debt Funds: A Significant Decline
Debt funds recorded a notable decrease in inflows, with November witnessing Rs 12,915.9 crore compared to Rs 1.57 lakh crore in October. Key trends in the debt category include:

• Overnight Funds: Inflows stood at Rs 2,019.3 crore.
• Liquid Funds: These funds recorded an outflow of Rs 1,778.9 crore.

The substantial decline indicates a cautious approach among investors amid changing macroeconomic conditions.

Hybrid and Passive Funds: Contrasting Trends
Hybrid schemes experienced a significant drop in inflows, declining to Rs 4,123.7 crore from Rs 16,863 crore in October. The Multi-Asset Allocation Funds category led the way with Rs 2,443.8 crore in inflows. Meanwhile, arbitrage funds, which dominated in the previous month, saw reduced activity.

In contrast, Passive Funds attracted strong interest, with new fund offerings (NFOs) in this category accounting for Rs 4,052 crore of inflows, demonstrating growing demand for cost-efficient investment options.

New Fund Offerings: A Focus on Passive Funds
NFOs played a crucial role in November's inflows, contributing Rs 4,052 crore. Most launches occurred in the passive funds category, which has emerged as a preferred choice for investors seeking simplicity and lower expense ratios.

Conclusion
The numbers in November reflect an evolving investment landscape, with notable shifts across equity, debt, and hybrid categories. As markets continue to adjust to macroeconomic signals, investors are urged to stay informed and align their strategies accordingly.

Disclaimer: The article is for informational purposes only and not investment advice.