FUNDAMENTALS STRONG: Investors shrug off selloff in Jan, SIP a little less

Mumbai: Retail investors continued to allocate to equity mutual funds in January, undeterred by the continued weakness in the stock market.

Equity schemes, led by small- , mid-cap and thematic funds, received ₹39,688 crore inflows during the month as against ₹41,156 crore in December. Investments through monthly systematic investment plans (SIPs) softened a tad to ₹26,400 from the previous month's ₹26,459 crore.

Debt funds saw inflows of ₹1.29 lakh crore, led largely by liquid, overnight and money market funds. As per data from the Association of Mutual Funds of India, total average assets under management decreased to ₹68.04 lakh crore in January from ₹69.33 lakh crore in the previous month.


"The flows are stable given that there has been heightened volatility and a market correction led by FII selling pressure," says Akhil Chaturvedi, executive director, Motilal Oswal AMC.

All equity-oriented categories received net inflows during the month with sectoral funds, and mid- and small-cap funds continuing to receive a bulk of the flows. Sector and thematic funds garnered ₹9,017 crore, mid-caps ₹5,148 crore, and small-caps ₹5,721 crore. Flexicap funds attracted ₹5,698 crore and multi-cap funds garnered ₹3,567 crore.

Being the first month of the quarter, corporates with surplus money returned to liquid funds and overnight funds with these categories seeing cumulative inflows of ₹1.10 lakh crore.

Gold ETF (exchange traded fund) saw the highest monthly net inflow ever in January with these funds getting ₹3,751 crore, higher than ₹640 crore in December.

"The current volatility in domestic and global equity markets heightened investors' risk aversion, leading many to seek refuge in gold ETFs, which are traditionally considered safe-haven assets," said Himanshu Srivastava, associate director, Morningstar Investment Research India. Expectations of further rate cuts by central banks also increased the appeal of gold as a non-yielding asset.

In the hybrid segment, arbitrage funds, considered a safe product category, saw inflows of ₹4,292 crore. Multi-asset allocation funds, which invest in a mix of debt, equity and gold, saw inflows of ₹2,123 crore. Balanced advantage funds saw inflows of ₹1,512 crore and equity savings funds saw inflows of ₹402 crore.