Equity Mutual Fund Inflows Decline Marginally in January; Gold ETFs Witness Record Inflows
Equity mutual fund inflows declined 3.6 per cent in January to Rs 39,687.78 crore, while SIP contributions remained steady. Gold ETFs saw record inflows amid market volatility and interest rate expectations.
Equity mutual fund inflows saw a slight decline of 3.6 per cent in January, totaling Rs 39,687.78 crore, according to data released by the Association of Mutual Funds of India (AMFI) on February 12. Despite this, investments through systematic investment plans (SIP) remained strong, with contributions amounting to Rs 26,400 crore, marginally lower than Rs 26,459 crore recorded in December.
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In the previous month, inflows into open-ended equity funds had increased by 14.5 per cent to Rs 41,155.91 crore, driven by investments in Small-Cap and thematic/sectoral funds. The net inflows into open-ended equity funds have remained positive for 47 consecutive months. The decline in inflows coincided with a subdued stock market, where the BSE Sensex dropped by 1.28 per cent, and the NSE Nifty 50 fell by 0.99 per cent in January.
Equity Mutual Fund Trends
Within the equity category, small-cap funds saw a 22.6 per cent rise in inflows, reaching Rs 5,720.87 crore, while Mid-Cap fund investments increased slightly to Rs 5,147.87 crore. Large-Cap funds experienced a significant rise of 52.3 per cent, attracting Rs 3,063.33 crore. However, inflows into Sectoral/Thematic Funds dropped 41.2 per cent to Rs 9,016.60 crore due to fewer new fund launches. Three new Sectoral/Thematic Funds raised Rs 2,838 crore during the month.
Debt Mutual Fund Performance
Debt mutual funds recorded net inflows of Rs 1,28,652.58 crore in January, rebounding from net outflows of Rs 1,27,152.63 crore in December. Liquid Funds led the category with Rs 91,592.92 crore in inflows, followed by Rs 21,915.53 crore in Money Market Funds. Meanwhile, Short Duration Funds and Gilt Funds saw net outflows of Rs 2,066.19 crore and Rs 1,359.66 crore, respectively.
Hybrid Fund Flows
Investments in hybrid funds, which diversify across equities, debt, and commodities, surged by 100.6 per cent to Rs 8,767.52 crore. Arbitrage Funds recorded the highest inflows at Rs 4,291.74 crore, a turnaround from outflows of Rs 409.09 crore in December. Multi Asset Allocation Funds saw inflows of Rs 2,122.85 crore, though this represented a 17.6 per cent decline month-on-month. Dynamic Asset Allocation/Balanced Advantage Funds attracted Rs 1,512.06 crore in investments.
Record Inflows into Gold ETFs
Gold Exchange-Traded Funds (ETFs) received net inflows of Rs 3,751.42 crore in January, marking their highest-ever monthly inflow, a sharp increase from Rs 640 crore in December. Investors turned to gold ETFs amid market volatility and economic uncertainty. Additionally, expectations of interest rate cuts by major central banks, including the U.S. Federal Reserve, enhanced gold's appeal as a safe-haven asset. Lower interest rates reduce the opportunity cost of holding gold, making it a more attractive option.
Industry-Wide Mutual Fund Trends
Overall, open-ended mutual funds recorded net inflows of Rs 1,87,606.23 crore in January, reversing net outflows of Rs 80,509.20 crore in December. The total net assets under management (AUM) of the Indian mutual fund industry stood at Rs 67.25 lakh crore, up from Rs 66.93 lakh crore in the previous month.
Disclaimer: The article is for informational purposes only and not investment advice.