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Mutual Fund News: These factors led to the surge in net inflows for equity mutual funds in August

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Equity mutual fund inflows have picked up 20,245 crore in August, data from the Association of Mutual Funds in India (Amfi) showed. Investors poured in record 15,813 crore in August through systematic investment plans (SIP) last month.

What factors have contributed to the rise in net inflows for equity mutual funds?

Decoding the reasons behind the rise in net inflows to equity mutual funds, Mukesh Kochar, National Head – Wealth Management, AUM Capital, attributed it to the result of extraordinary administration in the equity market. “The market has made great progress and it’s been a great month for mid-cap and small-cap performance. The flow from SIP is consistent and at the same time, the number of family offices and HNIs are also increasing equity allocation given the performance and the fear of missing out,” said Mukesh Kochar.

He also advised investors to rebalance their portfolios by increasing exposure to large-cap funds.

“We believe that the small-cap space has undergone an unusual shift and one needs to be a little cautious about that. Cash flow will chase stocks and that may create some overvaluations in some pockets, especially in the small cap space. At the same time a large cap is not held up much. Due to overspending in the small cap space the overall exposure in this space has to increase and needs to be rebalanced,” said Kochar.

Ashish Aggarwal, MD, Acube Ventures believes that a bullish or optimistic stock market situation is one of the main reasons for inflows into equity mutual funds.

“When stock markets perform well, investors are more likely to invest in stocks, leading to increased inflows into equity mutual fund investments,” said Ashish Aggarwal.

Investors are increasingly interested in high-quality mutual funds that regularly outperform their benchmarks. As young people enter the workforce and start preparing for retirement, they often have more time to invest and are able to allocate a larger portion of their assets to stocks, Aggarwal said.

The overall MF industry assets under management (AUM) increased. 46.93 lakh crore in August. The overall AUM for retail investor stakes in equity schemes was at 24.38 lakh crore portfolios from last month.

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Updated: 13 September 2023, 01:05 PM IST

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