August 2023 for AMFI Information: Between April and August 2023, wise investors invested Rs. 28,244 crore in mid- and small-cap funds.
According to the most recent mutual fund data issued by the Association of Mutual Funds in India (AMFI), SIP inflows for the month of August were at Rs. 15,813 crore, much higher than the Rs. 15,000 crore level for the second month.
Data demonstrates that despite markets moving into a higher valuation range, investors have kept to their rigorous strategy of choosing Systematic Investment Plans.
Investor interest in small-cap funds persisted in the month of August. Multicap funds, Mid Cap Funds, and Flexi Cap Funds, however, saw significant inflows in the month prior.
“Investors maintained their interest in small-cap funds with inflows of Rs. 4265 crore, keeping the run rate above Rs. 4000 crore for the third consecutive month. The other three categories that had significant inflows from investors were multicap funds with inflows of Rs. 3422 crore, midcap funds with inflows of Rs. 2512 crore, and flexi cap funds with inflows of Rs. 2193 crore, according to Gopal Kavalireddi, vice president of research at FYERS.
The monthly flows into equity mutual funds increased by 165% for the fifth consecutive month. Thematic funds took in the most money—Rs 4806 crore—of the inflows totaling Rs 20,245 crore.
In August, five new fund offers from the sectoral fund category brought in a combined total of Rs. 2556 crore. Seven NFOs in the equity categories raised a total of Rs. 5002 crore, while one hybrid category plan raised Rs. 2247 crore.
By the end of August, there were 46.63 trillion rupees in assets under management (AUM), up from 46.37 trillion, with equity AUM contributions of 18.4 trillion rupees, up from 17.8 trillion rupees (MoM).
“Net inflow into mutual funds stood at Rs.14,386 crore, a significant decrease from the inflows of Rs.82,046 crore in July. While the debt sector experienced net withdrawals of Rs. 25,872 crores, equity mutual funds continued to perform well, receiving net inflows of Rs. 20,245 crores, with hybrid fund inflows of Rs. 17,082 crores continuing their upward trend from last month, according to Kavalireddi.
The large-cap indices underperformed the mid-and small-cap indices during the past six months by a wide margin.
The benchmark Nifty 50 index fell by 2.53% in August, while the Nifty Midcap 100 index increased by 3.7%, following gains of 5.5% in July, 5.9% in June, and 6.25% in May.
“Given that Nifty Futures are currently trading above 20,000 levels, the enthusiasm reflected in the mutual fund inflow data for August 2023 is not surprising. Small- and mid-cap funds are popular right now, according to Viraj Gandhi, CEO of SAMCO Mutual Fund.
Investors in mutual funds are attracted by performance. The midcap 150 and small-cap 250 indices yielded roughly 8–9% in the previous month ending September 10, 2023, compared to 2% for the larger index Nifty 50, which may explain why these inflows have been observed. This was also brought on by a Rs 350 crore monthly outflow from large-cap funds, the speaker continued.
In August, the Nifty Smallcap 100 index increased by 4.6%, continuing the impressive monthly gains of 8% in July, 6.6% in June, and 5.1% in May.
Smart investors injected Rs. 28,244 crore into mid and small-cap funds between April and August after observing the underperformance of the larger markets at the start of the calendar year. Large-cap funds saw an outflow of Rs. 5588 crore within the same time period, according to Kavalireddi.
India’s market cap to GDP ratio has surpassed the 106% threshold and is currently approaching the overpriced zone.
“Prudent investors can look to take their foot off the pedal from infusing fresh lumpsum funds into the market and continue the SIP mode to counter any market correction or volatility in the near term,” suggested Kavalireddi.
