Not all investors enter the shares market with full gusto. The constant volatility inspires many to invest in mutual funds that help earn returns in sync with stock movement. This is evident from the data released by the Association of Mutual Funds of India (AMFI) that showed continued investments in equity mutual funds in February 2022. The statistics shared by the regulatory body for the mutual funds sector in India highlighted a rise in equity inflows to ₹19,705.27 crores in February from ₹14,887.77 crores in January this year.
The net assets under management in 32 large-cap mutual funds in February amounted to ₹2,16,794.50 crores, a notch higher than ₹2,16,341.22 crores collected through investments in flexi cap funds. This was followed by midcap fund investments that amounted to ₹1,52,548.49 crores. Surprisingly, people showed interest in small cap funds too as 24 mutual fund companies pooled in investments up to ₹1,00,406.66 crores.
The investors' interest in dividend yield funds was comparatively much lower as eight fund companies managed to garner only ₹9,421.98 crores in them.
In the debt fund category, corporate bonds recorded a major outflow of ₹10,218.74 crores, while money market funds saw net outflows worth ₹655.82 crore in February 2022. Ironically, investments in liquid funds stood at ₹40,273.37 crores. With markets assuming a bearish form, more investors discontinued their investments in hybrid funds. This is evident from the continued cash outflow from these funds in February as opposed to dynamic asset allocation or balanced advantage funds with a net income inflow of ₹2,117.99 crores.
The number of large-cap fund folios went up to 1,23,13,521 highlighting investors’ faith in large-cap stocks compared to midcap and small-cap stocks that showed the most arbitrariness in share prices. Though the number of people investing through systematic investment plans (SIPs) grew up to 5.17 crores from 5.05 crores in February 2022, contributions through SIPs were limited were down by ₹17 crores.
Vikaas M Sachdeva, CEO, Emkay Investment Managers Ltd said, “The consistent flow into MFs for the month of February, despite the geopolitical tensions and their impact on the global equity, commodity, and currency market, the mutual funds invested ₹19,645 cr in equity-focused funds remain impressive. Investors are turning out to be more discerning in their patronage, thanks to the continuing efforts of the MF Industry and its evolved distribution fraternity. If one has to read into the inflows in large-cap funds and flexicap funds, it indicates a strong preference for the long-term fundamentals of the India story and the ability of high-quality companies to ride it.”
The stable SIP flows of ₹11,438 crore, as well as passive investment options despite global geopolitical conflagration, show the keenness of a large segment to stick to the knitting in terms of asset allocation. This continues to act as an effective counterweight to FII outflows and is helping stabilize the markets more robust than before
Parking money in solution-oriented funds like the retirement and children fund schemes with February net income inflow being ₹107.73 crores and ₹57.24 crores, respectively. However, gold ETFs suffered a blow with net outflow to ₹248.06 crores as opposed to other ETFs wherein investments went up to ₹10,791.18 crores. Overall, the open-ended schemes performed much better than their close-ended counterparts that had limited buyers.