Despite the rally in the stock market fizzling out after September, equity mutual funds (MFs) closed the year with net inflows of Rs 41,156 crore in December. This led to a year-on-year rise of 144%, taking the total equity inflows to a record Rs 3.9 lakh crore for 2024.
Equity MFs saw the second-best monthly inflows in December, just shy of Rs 41,887 crore achieved in October, fuelled by a strong investor sentiment in the sectoral and thematic as well as small- and mid-cap funds. This came despite the equity markets closing the month in the red, down over 2%.
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“The correction in the markets during the month provided a good investment opportunity for investors, which they didn’t fail to capitalise on,” Himanshu Srivastava, associate director – manager research at Morningstar Investment Research India, said.
Mid-cap funds attracted record inflows of Rs 5,093 crore during the month while small-cap funds saw the second-highest monthly inflows of Rs 4,668 crore, despite concerns about the risks involved in the two segments, the Association of Mutual Funds of India said.
Srivastava believes that the continued strong inflows in mid- and small-caps, and categories which have significant exposure in these two segments show the investor preference, as they have consistently generated high returns over the last few years.
Sectoral and thematic funds contributed the most ― Rs 15,332 crore, largely boosted by the launch of 12 new fund offerings (NFOs). “Sectoral funds continue to shine with NFOs driving the bulk of the flows,” said Anand Vardarajan, chief business officer at Tata Asset Management.
Suranjana Borthakur, head of distribution and strategic alliances at Mirae Asset Investment Managers (India), however, cautioned against the high concentration of inflows in a single fund category. “While thematic funds work well in satellite portfolios, it’s crucial for investors to avoid overexposure to any particular sector, and instead seek diversified opportunities that align with long-term trends in India, such as consumption, banking, financials, and healthcare.”
The inflows through systematic investment plans (SIP) stood at Rs 26,459 crore, compared with Rs 25,320 crore in November―managing to achieve a new high for the 17th time in the past 18 months.
“Despite volatile market conditions,
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