Inflows into small cap equity mutual funds touched record high of Rs 5,471.75 crore in June due to higher traction in the segment amid rally in the stock market, according to the data released by the Association of Mutual Fund (AMFI).
In May, total inflows into small cap funds stood at Rs 3,282.5 crore.
In June, net inflows into equity mutual fund schemes stood at Rs 8,637.49 crore compared to inflows of Rs 3,240.3 crore in May. Within equity schemes, there were outflows of Rs 2,049.61 crore from large cap funds and Rs 1,018.31 from focussed funds.
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“Essentially there is a rotation of stocks happening. People are withdrawing money from large cap funds and trying to put it back in the small cap fund because they find that there is a potential to make more gains in the small cap funds,” said N S Venkatesh, Chief Executive Officer (CEO), AMFI.
In June, the BSE Sensex rose by almost 4 per cent.
Recently, due to higher-than-usual inflows into small cap funds, Nippon Life India Asset Management, announced that it will not accept lump-sum investments in one of its schemes – Nippon India Small Cap Fund (NISF).
Debt mutual funds saw outflows of Rs 14,135.52 crore in June compared to inflows of Rs 45,959.03 crore in the previous month. The outflows from liquid funds were Rs 28,545.45 crore. Ultra short duration fund witnessed outflows of Rs 1,886.57 in June.
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“Its is a treasury management exercise. Corporates withdraw money from liquid funds and pay their (advance) taxes,” Venkatesh said.
The number of new systematic investment plans (SIPs) registered in June hit an all time high of 27.78 lakh, the AMFI data showed. The number of SIPs matured or discontinued in June touched an all-time high of 15.26 lakh.
“There is no discernible reason which can be attributed to this (higher maturity or discontinuation of SIPs). June is when you see educational expenses rising. People would have withdrawn money to pay the admission and tution fees. Investors would have also withdrawn money as markets reached an all-time high,” Venkatesh explained.
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Venkatesh, however, expects investors, who have discontinued their SIPs, to re-enter the market to take advantage long-term positive outlook on India’s growth.
The number of SIP accounts rose by 12.52 lakh to 6.65 crore as on June 30, 2023 from 6.53 crore in the previous month. The contribution from SIPs stood at Rs 14,734.45 crore in June as against Rs 14,748.68 crore. The SIP AUM (asset under management) stood at Rs 7,93,608.79 crore, compared to Rs 7,52,943.79 crore in May. Mutual fund industry’s net AUM was Rs 44,39,187 crore, while average AUM stood at Rs 44,82,314 crore for June.
Mutual fund folios reached an all-time high of 14,91,31,708 in June compared to 14,73,75,502 in May. Retail MF folios (equity + hybrid + solution oriented schemes) was also at an all-time high at 11,90,63,434 in June.