Equity mutual fund investments slowed in July as concerns over valuations and subdued equity returns made investors more selective. Inflows into equity-oriented schemes fell 15 per cent from the previous month to Rs 24,697 crore, according to data released by industry body Amfi on Tuesday.The decline, however, did not mark a break in the sustained flow of money into equity mutual funds. July was the 65th consecutive month in which equity-oriented schemes registered positive inflows.At Rs 24,697 crore, July’s inflow was lower than the Rs 28,973 crore recorded in June and significantly below the Rs 42,702 crore seen in July last year.SIP contributions, meanwhile, remained resilient. Monthly SIP inflows increased marginally to Rs 31,961 crore in July from Rs 31,781 crore in June. Contributions through the route have stayed above Rs 31,000 crore for five consecutive months.“The moderation in equity mutual fund inflows reflects a degree of selectivity rather than a loss of investor confidence in equities. It also highlights ongoing portfolio rebalancing amid evolving valuations, with investors favouring segments that offer stronger long-term return potential while remaining mindful of associated risks,” said Ankur Punj, MD & Business Head, Equirus Wealth.Akhil Chaturvedi, Executive Director and Chief Business Officer, Motilal Oswal Asset Management Company, said investors’ cautious approach towards equity-oriented mutual funds was partly linked to lower returns over the past two years.Smallcap funds attracted the highest investment among equity categories in July, with inflows of Rs 7,768 crore. Midcap funds received Rs 6,192 crore, while flexicap funds garnered Rs 4,710 crore. Largecap funds saw inflows of Rs 1,322 crore.“July’s mutual fund flow data is broadly in line with expectations, with investor interest in diversified equity categories remaining steady,” said Santosh Joseph, CEO, Germinate Investor Services.
Debt funds lift overall mutual fund flows
While equity fund inflows moderated, the mutual fund industry as a whole saw a strong reversal in July. The industry recorded a net inflow of around Rs 2.36 lakh crore during the month, compared with an outflow of Rs 52,949 crore in June.Debt-oriented schemes accounted for much of the turnaround, moving from an outflow of Rs 1.09 lakh crore in June to an inflow of around Rs 1.88 lakh crore in July.Liquid funds led the debt category with net inflows of Rs 1,19,066 crore. Overnight funds attracted Rs 40,413 crore, while money market funds saw inflows of Rs 21,180 crore.“The sharp reversal in debt flows was led by strong inflows into liquid, overnight and money market funds, even as longer-duration categories remained under pressure. This suggests that investors continue to value liquidity and flexibility in their debt portfolios rather than making a broad-based shift towards taking duration risk,” said Varun Gupta, CEO, Groww Mutual Fund.The industry’s assets under management also increased during the month. AUM rose 4.3 per cent month-on-month to Rs 85.76 lakh crore at the end of July, compared with Rs 82.22 lakh crore at the end of June.“The Indian MF industry’s AUM grew 4.3 per cent month-on-month to reach Rs 85.76 lakh crore in July. The increase was largely driven by higher market value and sustained buying by DIIs,” said Venkat Chalasani, Chief Executive, Amfi.
Gold ETF inflows ease
Gold ETFs continued to draw investments in July, although the pace of inflows slowed from the previous month. The category recorded net inflows of Rs 1,559 crore, down from Rs 3,443 crore in June.“The moderation in flows compared with June may partly reflect some degree of profit-booking following gold’s strong price appreciation and the robust inflows witnessed during the first half of the year,” said Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India.
