Equity mutual funds' inflow drops 76% to Rs 2,258 cr in November 2022 – Analyst decodes reason behind fall

The net inflow in equity mutual funds plunged 76 per cent to Rs 2,258 crore in November over the preceding month amid a sharp up move in the stock market that made investors wary of higher valuation. This also marks the 21st straight month of inflows into equity schemes.

Overall, the mutual fund industry registered net inflows of Rs 13,263 crore in November, slightly lower from Rs 14,045 crore seen in the previous month, data released by the Association of Mutual Funds in India (Amfi) showed on Friday.

Experts believe that the decline in inflows in equities funds could be attributed to the sharp surge in the stock markets that made investors wary of higher valuations.

The November data indicates the investors’ preference among the categories of stocks, Viraj Gandhi, CEO, Samco Mutual Fund said. “Retail investors are booking profit in Large Caps and are entering Mid and Small Cap funds.”

He added that the November data shows that large cap category witnessed redemption of Rs 1,038 crore on one side while on other side, mid-cap category saw inflows of Rs 1,176 crore and small-cap Funds received Rs 1,378 crore.

Similarly, Arbitrage and Balance Advantage Fund (BAF) also witnessed higher redemptions, the Samco Mutual Fund CEO said.

According to Gandhi, overall, November was a subdued month for the MF Industry in the equity segment barring a couple of equity NFOs (New Fund Offerings).

Despite the fact that equity market has remained robust and hit all-time high level in the month of November, the outflow also indicates lack of euphoria in the market, the market analyst noted.

Apart from equity, debt-oriented mutual fund schemes witnessed a net infusion of Rs 3,668 crore during the period under review after withdrawing Rs 2,818 crore in the preceding month.

Other schemes -- index funds, gold exchange-traded funds (ETFs), other ETFs and Fund of funds investing overseas -- saw an inflow of Rs 10,394 crore. This was mainly driven by index funds, which contributed Rs 8,602 crore alone. However, gold ETFs witnessed a net withdrawal of Rs 195 crore.

With PTI Inputs