Equity mutual funds inflows hit 9-month high at Rs 15,685 crore in Feb

Equity mutual funds attracted Rs 15,685 crore in February, making it the highest net infusion in nine months despite significant volatility in the stock markets.

This is higher than Rs 12,546 crore inflow seen in January and Rs 7,303 crore reported in December.

February also saw the 24th straight month of inflows into equity-oriented mutual fund schemes, data with the Association of Mutual Funds in India (Amfi) showed on Friday.

Backed by healthy inflow into equity funds, the mutual fund industry saw an inflow of Rs 9,575 crore in February.

As per the data, the total net flows in equity schemes stood at Rs 15,685 crore. This was the highest level since May 2022, when equity funds attracted Rs 18,529 crore.

Investors continue to invest in a disciplined manner, countering the volatility in stock markets arising out of Foreign Portfolio Investor (FPI) outflows, Gopal Kavalireddi, Head of Research at FYERS, said.

Moreover, contribution from SIP (Systematic Investment Plan) has been averaging above Rs 13,000 crore-mark every month since October 2022.

Within the equity funds, thematic or sectoral funds saw an inflow of Rs 3,856 crore, trailed by small-cap funds (Rs 2,246 crore) and multi-cap funds (Rs 1,977 crore).

Apart from equities, Index funds continue to gain investor attraction with a total flow of Rs 6,244 crore.

In addition, Gold Exchange Traded Funds (ETFs) clocked an infusion to the tune of Rs 165 crore.

"With interest rates expected to rise from the current levels, debt funds continued to witness outflows as investors churn their allocation between short and long-term funds," Kavalireddi said.

Overall, debt funds saw a net withdrawal of Rs 13,815 crore last month as compared to an outflow Rs 10,316 crore in January.

Liquid funds outflows were the highest at Rs 11,304 crore during the month under review, followed by ultra short duration funds at Rs 2,430 crore and low duration funds at Rs 1,904 crore.

"With inflation coming in higher after a two-month cool down, RBI is wary of the evolving situation and might opt to increase rates in upcoming policy meets. As the US Federal Reserve vowed to (continue with) interest rate hikes for a longer time to tame inflation, the terminal interest rate could reach 6 per cent, prompting the further flight of capital from markets outside the US," he added.

The Assets Under Management (AUM) of the 42-player mutual fund industry was marginally down to Rs 39.46 lakh crore at the end of February from Rs 39.62 lakh crore at the end of January.