Equity MFs inflow drops 16 pc to Rs 18,917 cr in Apr; SIP contributions cross Rs 20,000 cr-mark

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New Delhi, May 9 (PTI) Equity mutual funds attracted Rs 18,917 crore in April, marking a slump of 16 per cent from the preceding month, on a huge decline in inflow in large-cap funds and increased volatility in market owing to pre-elections phase.

This also marks the 38th consecutive month of net inflows in equity funds, starting from March 2021, data with the Association of Mutual Funds in India (AMFI) showed on Thursday.

Despite the decline in inflow, monthly Systematic Investment Plan (SIP) contributions crossed the Rs 20,000 crore-mark and reached an all-time high of Rs 20,371 crore in April compared to Rs 19,271 crore in the previous month.

Further, SIP accounts surged to 8.7 crore in April with 63.65 lakh new registrations.

Overall, the mutual fund industry has witnessed an inflow of Rs 2.4 lakh crore in the month under review after experiencing an outflow of Rs 1.6 lakh crore in March. The huge inflow was due to investment of Rs 1.9 lakh crore into debt schemes.

Driven by strong inflows in equity and debt categories, the industry's net assets under management rose to Rs 57.26 lakh crore last month from Rs 53.54 lakh crore in March-end.

As per the data, equity-oriented schemes witnessed an inflow of Rs 18,917 crore in April, way lower than Rs 22,633 crore registered in March and Rs 26,866 crore in February.

"This can be attributed to the pre-elections phase that has resulted in increased market volatility which may have cautioned smart investors that preferred to stay away from investments," Jean Christophe Gougeon, Director & Chief Marketing Officer, Sharekhan by BNP Paribas, said.

A total of nine schemes were launched in April in the category of open-ended scheme, raising a total of Rs 1,532 crore.

Barring equity-linked saving schemes (ELSS), which saw an outflow of Rs 144 crore, all categories experienced inflow in equity segments. Within the equity class, sectoral or thematic funds continued to remain the maximum contributors with inflows of Rs 5,166 crore, followed by the multi-cap category which witnessed net inflows of Rs 2,724 crore.

The small-cap category bounced back with net inflow of Rs 2,208 crore in April after witnessing an outflow of Rs 94 crore in March.

Notably, the inflow in large-cap funds drastically declined to Rs 357 crore in the month under review from Rs 2,128 crore in March.

"This could be due to investors opting to invest in this segment via passive funds and/or investors opting to invest in relatively riskier categories whilst being biased to the large cap segment viz flexi cap category and large & midcap category," Melvyn Santarita, Analyst, Morningstar Investment Research India, said.

With regards to the KYC norms applicable with effect from April 2024, Venkat Chalasani, Chief Executive, AMFI, said that 93 per cent of MF accounts have 'KYC validated' or 'KYC registered' status and only 3 per cent accounts have 'KYC hold' status.

"The mutual fund industry is addressing concerns for a smooth process. Together with AMCs, distributors and other stakeholders, we are committed to facilitating a seamless KYC validation process for all, thereby ensuring the integrity and accessibility of mutual fund investments across the board," he added.

In addition to equities, hybrid funds experienced a remarkable increase in inflows, reaching Rs 19,863 crore as compared to Rs 5,584 crore in March 2024. Huge chunk of the inflow can be contributed to the institutional money being reinvested in arbitrage funds.

Debt-oriented schemes witnessed a robust inflow of Rs 1.9 lakh crore, propelled by investments in liquid funds (Rs 1.02 lakh crore), money market funds (Rs 34,000 crore), and overnight funds (Rs 21,000 crore).

"This surge in inflows can be attributed to factors such as quarter-end demands for advance tax, diminishing year-end redemptions, and continued volatility in the stock markets, leading investors to favour cash for short-term investment," Gopal Kavalireddi, Vice President of Research at FYERS, said.

Further, mutual fund folios hit at an all-time high of 18.14 crore in April. This included retail MF folios, comprising equity, hybrid, solution-oriented schemes, hitting an all-time high of 14.54 crore. PTI SP HVA