Mutual Fund News: These factors led to the surge in net inflows for equity mutual funds in August

 

Equity mutual funds in India saw inflows of ₹20,245 crore ($2.78 billion) in August, driven by a strong stock market performance. Experts advise rebalancing portfolios and increasing exposure to large-cap fundsun

Equity mutual funds inflows surged to ₹20,245 crore in August, the Association of Mutual Funds in India (Amfi) data showed. Investors poured in a record ₹15,813 crore in August through systematic investment plans (SIP) last month. 

What factors have contributed to the surge in net inflows for equity mutual funds?

Decoding the reasons behind the surge in net inflows for equity mutual funds Mukesh Kochar, National Head - Wealth Management, AUM Capital attributed it to the result of an extraordinary run-up in the equity market. “The market has made a tremendous move and it's been a great month for mid & small-cap performance. The flow from SIP is consistent and at the same time, Family offices and HNIs are also increasing equity allocation given the performance and fear of missing out," said Mukesh Kochar.

He further advised investors to rebalance their portfolios by increasing exposure to large-cap funds.

“We believe that there has been some extraordinary run-up in small cap space and one needs to be a little cautious on that. The flow of money is going to chase stocks and that might create some overvaluations in certain pockets, particularly in small cap space. At the same time large cap has not run up much.  Due to overrun by small-cap space the overall exposure must have increased in this space which needs to be rebalanced," added Kochar.

A bullish or optimistic stock market situation is one of the key drivers of inflows into equities mutual funds believes Ashish Aggarwal, MD, Acube Ventures. 

“When stock markets perform well, investors are more likely to invest in stocks, resulting in increasing inflows into equity mutual fund investments," said Ashish Aggarwal.

Investors are increasingly interested in quality mutual funds that routinely surpass their benchmarks. As youngsters enter the labour force and begin to prepare for retirement, they frequently have more time to invest and are able to allocate a greater portion of their assets to stocks, added Aggarwal.

The MF industry's overall assets under management (AUM) grew to ₹46.93 lakh crore in August. The overall AUM for retail investors' bets on equity schemes was at ₹24.38 lakh crore portfolios as of last month.