The last month of the calendar year 2022 saw a massive 223 percent jump in inflow to equity mutual fund schemes vis-à-vis the preceding month. A total of 380 equity mutual fund schemes saw a total inflow of ₹7,303 crore in the month of December, whereas the corresponding data in November was ₹2,258 crore, shows the data released by the Association of Mutual Funds in India (AMFI).
Mutual funds that saw highest inflows and outflows in December 2022; Detail here
Among equity funds, smallcap funds saw the highest inflows at ₹2,245 crore in December 2022 from ₹1,378 crore in November, up a massive 63 percent even as it has been underperforming the benchmarks amid volatility. The rise in inflows came on the back of cheaper valuations in smallcaps, leading the investors to accumulate more. This was the highest inflow in smallcap funds during the calendar year.
Midcap funds witnessed the second highest inflows during the month at ₹1,962 crore from ₹1,176 crore in November, up 67 percent MoM. Before this, the highest inflows in this segment were seen in September at ₹2,151 crore.
Meanwhile, sectoral/thematic funds, which had been in a lot of focus during the year witnessed outflows of ₹203 crore in December 2022. In November, this segment saw inflows worth ₹1,379 crore. Except for August and December, this segment saw inflows in all the other 10 months of the year. The highest inflow in sectoral/thematic funds was seen in September at ₹4,418 crore.
Apart from thematic funds, focussed funds and largecap funds also witnessed outflows worth ₹164 crore and ₹26 crore, respectively, in the month under review. Both funds also witnessed outflows in November.
Meanwhile, Flexi cap funds and ELSS saw a trend reversal in December, witnessing inflows worth ₹403 crore and ₹564 crore, respectively. In comparison, Flexicap and ELSS funds saw outflows of ₹863 crore and ₹253 crore in November, respectively.
Another trend worth noting is that the inflow to index mutual funds witnessed a fall of 21.7 percent from ₹8,601 crore in November to ₹6,736 crore in December.
The fixed-income schemes or debt mutual fund schemes saw a massive outflow in December with ₹21,946 crore exiting a total of 312 schemes.
This is in contrast to a huge inflow of ₹3,668 crore in debt schemes in the preceding month of November. Even October also saw an outflow from debt schemes amounting to ₹2,817 crore from a total of 318 schemes.
Most debt funds saw outflows in December in a trend reversal from the previous month. Liquid funds took a complete U-turn, witnessing the highest outflows in December at ₹13,852 crore from massive inflows of ₹34,276 crore in November. However, the Ultra-short duration fund saw inflows of ₹1,737 crore in December after an outflow of ₹2,882 crore in November.
Hybrid schemes also saw a net inflow of ₹2,255 crores in December with multi-asset allocation fund contributing ₹1,711 crore of it. Among other categories of funds, Balance Advantage Funds (BAFs) saw an outflow of ₹413 crore.
Among ETFs, Gold ETFs continued their outflows in December at ₹273 crore after an outflow of ₹195 crore in November. Meanwhile, inflows in other ETFs rose massively to ₹8,788 crore in December, from ₹1,967 crore in November. This indicates a surge of 346 percent on an MoM basis.
In a recent report, domestic brokerage house ICICI Direct said that ETFs are best placed from an asset allocation perspective as they do not carry any stock selection risk.
In India, the ETF landscape has gained traction since 2015 and has not only become much bigger but also more diverse, informed the brokerage. AUM for ETFs has grown from ₹5,400 crore in December 2014 to above ₹5 lakh crore currently, it added.
The month of December also witnessed the launch of 36 new schemes out of which 24 were open-ended schemes while the remaining dozen fell in the category of close-ended schemes. These new schemes raised a total of ₹8,486 crore in December.
These new launches included 16 debt schemes, six equity-oriented, one multi-asset allocation scheme, nine index funds, and four other ETFs.
SIP inflows in December came in at ₹13,573 crore, an all-time high. For 2022 on a whole, SIP inflows stood at a record ₹1.49 lakh crore, up 31 percent from 2021, translating to a monthly average of ₹12,453 crore.
"It is impressive to see steady SIP inflows and it shows that investors are increasingly becoming aware of the benefits SIP can bring to their investments over time, especially when markets are volatile. Year just went by was, in a way, witness to this. Markets (refer Sensex) saw at least 3 or 4 intermittent corrections beyond -7 percent during the year 2022, still SIP inflows gradually improved by ₹2000 crore through 2022," said Sriram BKR, Senior Investment Strategist at Geojit Financial Services.
He further noted that even though new SIPs added in Dec is around 23 lakhs, the net addition seems around 7.85 lakhs (month on month), suggesting a SIP cancellation ratio at 66 percent, a 25-month high. This is a reason for concern about the SIP trends that we are seeing. Though there were instances of lower net additions seen in some months even in the past, the overall trend seems to be getting stable, cautioned the expert.
"Going forward, challenges would be on, above average redemptions induced either by profit booking or heightened volatility and cancellation of SIPs. Market falls or fluctuations for months in a row can be perplexing at times, but what we have seen in equities is that it rewards those with discipline and patience handsomely in the long term. Investors should continue their SIPs through the market volatility in order to reap the fullest gains of this whole systematic approach of investing in equities," he added.
In 2022, the total net flows into all mutual funds stood at ₹71,443 crore. Equity schemes ( ₹1.61 lakh crore), Index funds and ETFs ( ₹1.65 lakh crore) saw positive inflows whereas outflows was seen in debt schemes ( ₹2.5 lakh crore) collectively from the open and closed-ended categories.
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