Data from the Association of Mutual Funds in India (AMFI) showed monthly inflows through systematic investment plans touched an all-time high of ₹14,276 crore.
“Investors continue to add lump-sum money on market dips, which led to large inflows in equity mutual funds,” said Manish Mehta, national sales head at Kotak Mutual Fund. “Likely peaking of the interest rate cycles and the extra benefit of indexation on long-term capital gains saw several rich investors allocate money to long-term fixed income categories.”
All categories of equity mutual fund schemes saw inflows in February. Sectoral funds saw the highest inflows of ₹3,928 crore, aided by the NFO of HDFC MNC Fund, followed by dividend yield seeing inflows of ₹3,716 crore due to the NFO of SBI Dividend Yield Fund. Mid- and small-cap funds saw inflows of ₹2,129 crore and ₹2,430 crore, respectively. Lock-in of three years and last-minute tax planning to get Section 80C benefit of up to ₹1.5 lakh saw investors pouring money into ELSS funds, which saw inflows of ₹2,686 crore.
Separately, investors shuffled money across debt schemes to avail the benefit of long-term capital gains tax with indexation, a benefit that ended in March 2023.
While they exited categories like liquid and arbitrage funds, they allocated to long-tenure funds in categories like target maturity funds, corporate bond, dynamic bond, banking and PSU debt fund and gilt funds.
“Investors have faith in long-term investing and are using mutual funds to meet their goals, which saw money coming into all categories,” said G Pradeepkumar, CEO of Union Mutual Fund.The fixed income segment saw outflows of ₹56,883 crore, led by liquid, ultra-short-term funds, money market and overnight funds, which saw redemptions of ₹56,924 crore, ₹10,281 crore, ₹11,422 crore and ₹8,138 crore, respectively, as investors moved to long-duration category before the March 31 deadline to get the benefit of long term capital gains with indexation.
Long-tenure categories like corporate bond funds saw inflows of ₹15,626 crore, banking and PSU debt ₹6,496, dynamic bond ₹5,660 crore, and gilt funds ₹4,430 crore.
The index funds category, which includes both passive equity and debt funds, saw inflows of ₹27,228 crore as family offices and rich investors locked into high-yield passive target maturity funds.
In the hybrid segment, investors shifted away from arbitrage funds to debt funds withdrawing ₹12,158 crore. They also bought multi-asset funds – a mix of equity, debt and gold – putting in ₹473 crore, as they believe gold and debt could protect their portfolios against volatile equities. Gold exchange-traded funds saw outflows of ₹266 crore, as investors booked profit after the sharp rally in the last year.
