Inflows into midcap and smallcap mutual funds spike in Jan: Amfi

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Net inflows into equity mutual funds, which was at Rs 4,499.39 crore in December, surged to Rs 7,877.40 crore, the highest since August 2019.

Highlights

  • SIP inflows in January Rs stood at Rs 8,531.90 crore—a record high—up nearly Rs 14 crore from last month.

  • The total number of SIP folios crossed the 3-crore mark and stood at 3.04 crore.

  • Inflows into mid and smallcap funds picked up in January, with net inflows at Rs 1,798.16 crore and 1,072 crore, respectively
NEW DELHI: Investors kept pouring money into equity mutual funds in the first month of 2020, especially via the SIP route as benchmark indices maintained their footing and broader market indices came into their own.

As per the Association of Mutual Funds in India (AMFI) data released on Monday, SIP inflows in January ?stood at Rs 8,531.90 crore—a record high—up nearly Rs 14 crore from last month. SIP inflow in December was at Rs 8,518.47 crore.

The total number of SIP folios crossed the 3-crore mark and stood at 3.04 crore. The assets under management (AUM) from SIPs jumped to Rs 3.25 lakh crore, up from Rs 3.17 lakh crore in December.


Net inflows into equity mutual funds, which was at Rs 4,499.39 crore in December, surged to Rs 7,877.40 crore, the highest since August 2019. Inflows into mid and smallcap funds picked up in January, with net inflows at Rs 1,798.16 crore and 1,072 crore, respectively, as rally in broader markets helped investor sentiment.

Sensex slipped 1.28 per cent in January while BSE Midcap gained 3.3 per cent and BSE Smallcap index jumped 7.07 per cent.

The AMFI data also showed that there was a net inflow of Rs 1.20 lakh crore in mutual funds during January against an outflow of Rs 61,809.70 crore in December, thanks to inflow?s? of Rs 1.09 lakh crore in debt funds. Liquid funds saw a resumption of inflows at Rs 59,682 crore against Rs 71,158.51 crore outflow in December.
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N Venkatesh, Chief Executive, AMFI, sees more inflows into debt mutual funds as a benign interest rate cycle has begun. “Naturally, the debt inflows should start improving with the yields falling down. With the Reserve Bank of India launching Long Term Repo Operation (LTRO), the yields will start trending lower. If that is the case then money should flow into the debt mutual funds.”

“We expect the flows into mutual funds to gather further momentum in the coming months. On the fixed-income side one of the noticeable trends is a shift away from liquid funds toward overnight funds. With the introduction of exit load in liquid funds and certain additional restrictions that will come into effect from 1st April 2020 we expect this trend to continue,” said G Pradeepkumar, CEO at Union Asset Management Company.

The total assets under management (AUM) at the end of January jumped to Rs 27.85 lakh crore from Rs 26.54 lakh crore in the previous month. AUM for retail investment portfolio was at Rs 12.95 lakh crore.

Venkatesh said that the budget has been pro-growth and pro-investments and going ahead he sees a 15-20 per cent industry growth rate. Venkatesh said the government's decision to remove exemptions in the new tax regime will not affect flows into ELSS funds.
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ELSS funds saw substantial inflows as people started putting their money into tax saving schemes ahead of the end of the current fiscal. Inflows into the segment rose to Rs 931 crore during January, against the range of Rs 200-500 crore in the previous three months.

“ELSS is a good instrument for savings and people in higher tax brackets will continue to use the schemes," Venkatesh said.
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