SIP investments hit new high even as equity MF inflows decline in Oct

SIP flows rose to a new all-time high of ₹13,041 crore, compared with the previous month’s ₹12,976 crore. Flows in equity schemes slipped to ₹9,390 crore, compared with ₹14,100 crore in September, data from Association of Mutual Funds in India (AMFI) showed.

Average assets under management (AUM) moved down marginally to ₹39.53 lakh crore as compared with the previous month’s ₹39.88 lakh crore.

“Investors are confident about the long-term outlook of the Indian equity market. While they continue allocating money regularly through SIPs, on days when there are sharp falls, we see lump sum money coming in,” said Manish Mehta, chief business officer, Kotak Mutual Fund.

All categories of equity mutual funds barring dividend yield funds saw inflows with sector schemes clocking the highest inflow of ₹2,686 crore. Mid and small cap funds saw the highest flows of ₹1,385 crore and ₹1,592 crore, respectively, followed by large and midcap funds that saw flows of ₹1,190 crore.

“As the equity rally broadens, there is rising investor interest in mid and small cap stocks,” said Anand Varadarajan, business head, Tata Mutual Fund.

Debt mutual funds saw outflows of ₹2,818 crore as investors withdrew money from long-tenure categories and preferred to stick to liquid and ultra-short term funds. Liquid funds saw flows of ₹19,085 crore. However, overnight funds saw outflows of ₹7,505 crore. Low duration funds too saw withdrawals of ₹2,660 crore.

“A rising interest rate environment that’s been in place since May 2022 has likely resulted in investors preferring to move out of the debt markets in favor of investing in equity,” said Kavitha Krishnan, senior analyst – manager research, Morningstar India.

The index funds category, which includes both passive equity and debt funds, saw inflows of ₹5,076 crore as investors preferred to stick to low cost equity index funds and target maturity funds, where there is low mark to market risk.

Dynamic asset allocation funds, which invest in a mix of debt and equity based on market valuations, saw outflows of ₹454 crore, while aggressive hybrid funds, which allocate 65-75% of their portfolio to equities, saw inflows of ₹246 crore. Arbitrage funds saw outflows for the fifth consecutive month of ₹2,470 crore, as investors moved to liquid funds on expectations of better returns.