Investors flooded equity funds in October, without worrying about equity market valuation, according to data from the Association of Mutual Funds of India (AMFI), the trade association for the mutual fund sector. In addition to a rise in net flows for all equity fund categories, small cap mutual fund (MF) schemes had inflows of Rs 4,495 crore in October 2023 compared to Rs 2,678 crore the previous month.
In September, equities funds received inflows of Rs 14,091 crore; overall, they received inflows of Rs 19,957 crore. In October of 2023, the third-highest monthly inflow into equities funds was recorded.
Additionally, October marked the fourth consecutive month with positive net inflows for all equity fund categories (more money came in than went out).
Retail investors seem to believe that small-cap funds still have some power left in them. It’s true that several mutual fund companies have restricted or stopped accepting new contributions to their small-cap funds because they are having difficulty keeping up with the current volume of money entering the markets. When investing in small-cap funds, investors ought to exercise prudence. To invest in small-cap funds at these levels, they must first conduct their own due diligence, according to N. S. Venkatesh, the (outgoing) Chief Executive Officer of AMFI.
October saw an increase in inflows into the Rs 47 trillion Indian mutual fund (MF) market. There was a net influx of Rs 80,586 crore rather than a net outflow (more money was taken out than brought in). Systematic investment plans (SIP) are seeing an increase in inflows. SIP inflows increased to Rs 16,927.86 crore in October from Rs 16,042 crore the previous month.
On top of that, given that interest rates in the economy look to have peaked, investors also seem to be warming up to long-term debt funds. In October, inflows into long-term debt funds totalled Rs 3,656 crore. There was a net outflow of Rs 3,972 crore from these funds in September, meaning that more money left than came in. A detailed examination of the AMFI statistics reveals that the net inflows into government securities’ (g-sec) funds increased to an astounding Rs 2001 crore, from Rs 278 crore just one month earlier. Investors have also become more comfortable with corporate debt funds, which had a net inflow of Rs 1,940 crore.
Despite four consecutive months of net withdrawals, even short-term debt funds had net inflows of Rs 1,281 crore.