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In August, investors channeled a historic amount of Rs 15,813 crore into mutual funds through systematic investment plans (SIPs), according to a statement from the Association of Mutual Funds in India (Amfi). However, during the same period, there was a net outflow of Rs 25,872 crore from income or debt-oriented schemes.
Amfi's CEO, N S Venkatesh, explained that the Reserve Bank's incremental cash reserve ratio (CRR) measure, which aimed to withdraw excess liquidity from the system, had a partial impact on the performance of debt-oriented schemes. Banks typically view these schemes from a treasury management perspective.
The previous monthly high for SIP inflows was recorded at Rs 15,244 crore in July. Venkatesh noted that the assets under management (AUM) for SIPs reached Rs 8.47 lakh crore at the end of August, and an impressive 35 lakh new SIPs were initiated during the month.
Venkatesh emphasized that the record-breaking SIP flows indicate that retail investors are actively participating in the market. He also expressed optimism that this trend would continue due to factors such as robust economic growth, which would positively affect market sentiment.
The total AUM for retail investors' investments in equity and hybrid schemes reached Rs 24.38 lakh crore across 12.30 crore portfolios by the end of August.
Additionally, there was a record of 19.58 lakh SIPs that were discontinued or matured in August, compared to over 17 lakh in July. The overall AUM for the mutual fund industry increased to Rs 46.93 lakh crore in August, up from Rs 46.37 lakh crore in July.
SIPs involve individuals investing at regular intervals, typically starting from Rs 500 per month. The mutual fund industry, with 43 players, heavily relies on SIP flows.
Venkatesh clarified that the decline in debt AUMs does not necessarily indicate a trend, as it may be a result of ongoing treasury operations. He also mentioned a Rs 348 crore decrease in AUMs for large-cap schemes but expressed confidence in a rebound driven by higher earnings growth.
He further emphasized that the continued interest in small and mid-cap equity schemes, which witnessed growth of Rs 4,264 crore and Rs 2,512 crore, respectively, in August, is not driven by irrational exuberance. Investors appear to be considering a 60% dip in asset prices while making their investment decisions.
Lastly, in a noteworthy development, gold exchange-traded funds (ETFs) saw an inflow of over Rs 1,000 crore in August. Venkatesh attributed this to investors taking advantage of recent declines in gold prices.
According to Amfi data, industry players introduced a total of 14 new fund offerings in August, raising Rs 7,531 crore.
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