Equity AUM rise even as Sensex yo-yos in January, shows data

Assets under management (AUM) of key equity scheme categories rose even as the US Federal Reserve’s hawkish turn sent volatility soaring.

The benchmark Sensex yo-yoed over 5,000 points, or 9 per cent during the month. The index during the first half of the month rose more than 5 per cent and then plunged 8 per cent from the month’s high, only to rebound later. The gyrations were even steeper in the broader market.

Typically, such high volatility leads to panic among retail investors. However, that was not to be seen as most equity schemes saw their assets swell.

The ‘large and mid-cap’ category saw the highest increase in AUM at 5 per cent, shows the data from Association of Mutual Funds in India (Amfi).

Industry watchers saw the rise in AUM could be underpinned by inflows through the systematic investment plan (SIP) route and also lump sum flows by high-net-worth individuals, looking to take advantage of the dip.

In January, equity MFs pumped over Rs 18,500 crore into domestic stocks.

ICICI Direct Research in its note said, “Volatility, in general, is likely to be higher over the next few months. The higher volatility will continue to lead to sharper rotation of performance within sectors and market segments. Investors should be extremely careful while investing in sector funds. While remain constructive on mid and small-cap funds, multi-cap and flexi-cap funds are better placed for most investors in current environment where mid and small-cap funds have already outperformed significantly.”