Equity MFs hit record Rs 41,887 cr inflow in Oct; SIP at fresh high of Rs 25,323 cr

New Delhi: Equity mutual funds witnessed a record inflow of Rs 41,887 crore in October, marking a surge of 21.7 per cent on a month-on-month basis, fuelled by robust investments in thematic funds, despite the heightened volatility in the stock market.

This also marks the 44th consecutive month of net inflow in the equity-oriented funds, highlighting the ever-increasing appeal of mutual funds among investors, data with the Association of Mutual Funds in India (AMFI) showed on Monday.

Moreover, monthly contributions from the Systematic Investment Plan (SIP) rose to an all-time high of Rs 25,323 crore last month against Rs 24,509 crore in September.

The industry's robust growth is reflected in achieving the historic milestone of retail folios crossing 17.23 crore. The continued surge in SIP accounts, now exceeding 10.12 crore, along with a record monthly SIP contribution demonstrates the growing preference for disciplined investing among Indian investors, Venkat Chalasani, Chief Executive of AMFI, said.

The inflow came despite heightened volatility in stock markets with Foreign Portfolio Investors (FPIs) sucking out a massive Rs 94,000 crore in the month under review due to major global events, including the US elections. The correction in the markets during October provided a good investment opportunity for investors, which they did not fail to capitalise on.

"The 5-6 per cent drop in both the Sensex and Nifty was one of the sharpest in recent years, similar to what we last saw in March 2020. Despite this, retail investors have shown remarkable resilience, with inflows exceeding Rs 40,000 crore," Santosh Joseph, Co-founder and CEO of Germinate Investor Services, said.

Overall, the mutual fund industry witnessed an inflow of Rs 2.4 lakh crore in the month under review, after an outflow of Rs 71,114 crore in September. The huge inflow was due to investments to the tune of Rs 1.57 lakh crore into debt schemes.

The inflow has lifted the industry's net assets under management to Rs 67.26 lakh crore last month from Rs 67 lakh crore in September.

As per the data, equity-oriented schemes witnessed an inflow of Rs 41,887 crore in October, a growth of 21.7 per cent from the Rs 34,419 crore received in September.

Before this, equity schemes saw an inflow of Rs 40,608 crore in June.

Within the equity schemes, sectoral thematic attracted investors with the highest net inflows of Rs 12,279 crore during the month under review. However, flow in the segment was less compared to Rs 13,255 crore in September.

With this inflow, thematic funds have now become the largest equity category, with an asset base of Rs 4.5 lakh crore.

Investors showed interest across the schemes, however, a renewed interest can be seen in the categories with significant large-cap exposure such as Large cap, Multicap, Large & Midcap and Flexicap.

"Given large caps feature well from the valuation perspective in the current market scenario as against mid and small caps, there could have been some rebalancing done towards large caps. That's not to say that mid and small caps were far behind. Both these categories received robust flows," Himanshu Srivastava, Associate Director - Manager Research at Morningstar Investment Research India, said.

Also, the number of folios rose by 39.47 lakh in October, indicating investors are opting to invest in the equity markets through the mutual fund route.

"Strong flows across categories and asset classes are evident, with equity remaining positive across categories, driven by SIPs reaching an all-time high of Rs 25,000 crore. There is considerable interest in NFOs, which have seen inflows exceeding Rs 6,000 crore," Anand Vardarajan, Chief Business Officer at Tata Asset Management, said.

After a significant outflow of Rs 1.14 lakh crore in September, debt-oriented funds saw a strong recovery in October with inflows totalling Rs 1.57 lakh crore.

Overall, 14 out of 16 debt mutual fund categories recorded net inflows in October, while medium-duration and credit-risk funds continued their pattern of consistent outflows.

Liquid funds led the inflows with Rs 83,863 crore, accounting for 53 per cent of the total, followed by overnight funds and money market funds with Rs 25,784 crore and Rs 25,303 crore, respectively.

"Corporates typically channel surplus funds into liquid and money market funds post-tax settlements in September, reflecting a preference for these low-risk, highly liquid options," Nehal Meshram, Senior Analyst - Manager Research at Morningstar Investment Research India, said.