Amid a steady rise in the stock markets, inflows into small-cap mutual funds were at a record high in June. Net investments into small-cap equity schemes stood at a record high of ₹5,472 crore inflows month-on-month (MoM) in June 2023, according to the Association of Mutual Funds in India (AMFI). For the third straight month, the inflows into smallcap funds have been the highest.
The equity mutual funds have witnessed a net inflow of ₹8,245 crore in June 2023 as against ₹2,906 crore in May 2023. AMFI informed about the record data high in a call today.
“We are delighted to witness the consistent growth of assets under management (AUM) in the mutual fund industry, reaching one of the highest levels to date. The impressive increase of 29% in retail AUM on an annualized basis and 25% in average assets under management (AAUM) indicates a positive trend of net retail inflows. It is particularly encouraging to see money flowing into equity schemes, with small-cap inflows at an all-time high,” said NS Venkatesh, CEO, AMFI.
The inflows into equity funds have come on the back of the Indian market making a strong recovery.
“Equity fund flows were healthy, registering a net flow of ₹8,637 crore ( ₹3,240 crore in May), a three-month high. Maintaining the trend of previous months, investors continued their maximum allocation to small-cap funds ( ₹5,472 crore), trailed by value funds (Rs.2,239 crore) and mid-cap funds ( ₹1,749 crore). With large-cap stocks underperforming in H1CY2023 due to the notable valuation difference with the broader market-cap stocks, it was the right move by investors,” said Gopal Kavalireddi, Vice President – Research at FYERS.
However, average assets under management of the industry rose to a record high of ₹44.8 lakh crore at June-end from ₹42.9 lakh crore at the end of May.
Hybrid schemes had inflows of ₹4,611 crore, with a large part of inflows into arbitrage funds ( ₹3,366 crore).
Across the 16 categories of debt funds, the net outflow was ₹14,135 crore. For Q1FY24, the debt fund net flows were negative, at ₹70,213 crore, added Gopal Kavalireddi.
The investments via systematic investment plans (SIPs) inched lower to ₹14,734 crore in June. This is the fourth consecutive month of SIP flows coming in above the ₹14,000 crore mark.
“As we look ahead, the record-breaking number of new systematic investment plan (SIP) registrations in June 2023, totalling 27,78,507, reflects a strong belief in India’s growth story,” said NS Venkatesh
Large-cap funds, however, witnessed an outflow of ₹2,050 crore. Equity-linked savings scheme (ELSS) stood at ₹475 crore in June.
As per data available on Value Research, these five small-cap MF offered the best returns in the last six months
1)HDFC Small Cap Fund- Direct Plan- 21.13%
2)Franklin India Smaller Companies Fund – Direct Plan-20.36%
3)Tata Small Cap Fund – Direct Plan- 15.48%
4)Nippon India Small Cap Fund – Direct Plan- 19.79%
5)Quant Small Cap Fund – Direct Plan- 13.05%
Investment in small-cap mutual funds is associated with higher risk levels compared to large and mid-cap funds as they invest in lesser-known and under-researched companies
Equity mutual funds saw net inflows of ₹2,906 crore in the month of May 2023. Inflow in May was the lowest since November 2022.
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Updated: 10 Jul 2023, 03:08 PM IST
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