Equity mutual funds gain traction as inflows jump 72 per cent in January

In January 2023, equity mutual fund inflows continued to climb, while SIP contributions also increased. Continue reading to learn more about the Indian mutual fund industry.

Despite stock market volatility, inflows into equity schemes increased about 72 per cent in January 2023, kicking off the year 2023 on a high note for the domestic mutual fund industry. 

The Association of Mutual Funds in India (AMFI) reported an inflow of Rs 12,546 crore in January, up from Rs 7,303 crore in December. The net inflow is at its highest level in four months. Before that, in September, equity mutual funds saw inflows of Rs 14,100 crore. Additionally, this was the 23rd month in a row that equity-oriented schemes had inflows. 

The impressive results emerged as retail investors maintained their trust in systematic investment plans (SIP). In January, SIP contributions increased to Rs 13,856 crore, up from Rs 13,573 crore in December. This was the fourth month in a row that SIP inflows exceeded Rs 13,000 crore. 

Hybrid Funds continue to show a good trend, with net flows more than tripling to Rs 4,492 crore in January, while multi-asset and arbitrage funds had net flows of Rs 2,182 crore and Rs 2,055 crore, respectively. In addition, index funds received Rs 5,813 crore in inflows during the month. 

Debt-oriented mutual fund schemes, on the other hand, had a net outflow of Rs 10,316 crore during the month, compared to Rs 21,947 crore in December 2022. Within Debt Funds, liquid funds had the greatest outflow of Rs 5,042 crore, while money market funds saw an inflow of Rs 6,460 crore. 

The assets under management for the mutual fund industry were slightly lower at Rs 39.62 lakh crore in January as compared to Rs 39.89 lakh crore in December. Debt AUM was Rs. 12.38 lakh crore, while equity AUM was Rs. 15.06 lakh crore. 

N S Venkatesh, Chief Executive, AMFI commented: “There has been an overall growth momentum observed in mutual fund folios. January 2023 data showcases a positive trend in the Equity Mutual Fund inflows. Small Caps have witnessed inflows, majorly driven by retail investors as their investment is for a long-term return cycle. Encouraging SIP numbers indicate retail investors’ trust in Mutual Funds. We believe that SIP inflow momentum has and will continue to balance the FII outflows in the market. The importance of investing in equity markets for long-term goals through SIP as a goal-linked route to create wealth is gaining awareness. This month almost 23 lacs new SIPs were registered, which shows increasing investor belief in the instrument. SIPs are the simplest route to build a disciplined habit of regular investing.”