The inflow into equity mutual funds increased 42 per cent last month to ₹19,957 crore against ₹14,091 crore as investors used the fall in market valuation to pump in more money.
Interestingly, all the equity schemes received net inflows with small cap fund attracting the most of ₹4,495 crore (₹2,678 crore) followed by thematic and multi-cap fund getting inflow of ₹3,896 crore (₹3,147 crore) and ₹2,911 crore (₹2,235 crore).
Melvyn Santarita, Analyst, Morningstar Investment Adviser India said the mid-cap and the small cap indices have seen a sharp rally over the last six months and one year.
Investors should note that though both mid- and small cap categories have potential to deliver good returns, these categories inherently are volatile with sharp drawdown risks. They should have a long-term time horizon while investing in these categories and opting to SIP route is a good as investors can ride the volatility, he added.
Hybrid funds
The mutual fund industry collected ₹3,638 crore through new fund offers last month against ₹7,795 crore in September, according to data released by the Association of Mutual Funds in India.
Inflows into hybrid funds moderated to ₹9,906 crore (₹18,650 crore) in October despite arbitrage and multi-asset funds received an inflow of ₹5,523 crore (₹10,176 crore) and ₹2,410 crore (₹6,324 crore).
Akhil Chaturvedi, Chief Business Officer, Motilal Oswal AMC said the equity markets continued to experience a risk-off sentiment, with the Nifty falling below 19,000 levels.
Interestingly, SIPs now account for a larger part of inflows compared to one-time investment and this provides the market with a lot of strength.
Undamped Gilt funds
Debt funds received positive inflows of ₹42,633 crore against an outflow of ₹1.01 lakh crore in October with investments of ₹32,693 crore (outflow of ₹74,177 crore) and ₹6,248 crore (outflow of ₹1,958 crore) in liquid and money market funds. Overnight and low duration funds registered an outflow of ₹3,445 crore (outflow of ₹1,274 crore) and ₹1,142 crore (outflow of ₹963 crore).
NS Venkatesh, CEO, AMFI said despite peaking interest rates, there is a notable surge in money market investments and investors exhibited optimism in Gilt funds.
A remarkable increase in contributions to small-cap funds, indicating strong confidence and the large-cap category has also witnessed a noteworthy resurgence, reflecting broader market recovery, he added.
Overall, the mutual fund industry received an inflow of ₹80,528 crore taking the overall asset under management to ₹46.72 lakh crore (₹46.58 lakh crore).