NEW DELHI: Equity mutual fund inflows fell 42% year-on-year to Rs 24,697 crore in July, as investors turned more selective amid concerns over valuations and muted equity returns, though sustained SIP contributions continued to provide strong support to the segment.Despite the decline, equity-oriented schemes recorded their 65th consecutive month of positive inflows in July, according to data released by industry body Amfi on Tuesday.
Among equity categories, small cap funds led the inflows, attracting Rs 7,768 crore in July
However, the inflow was sharply lower than Rs 28,973 crore in June and Rs 42,702 crore in July last year. The moderation comes despite continued retail participation, with monthly systematic investment plan (SIP) contributions rising marginally to Rs 31,961 crore in July, from Rs 31,781 crore in June. The data points to a more cautious approach among investors, with money continuing to enter equities but at a slower pace and with greater selectivity.“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, ED & chief business officer, Motilal Oswal AMC, said the cautious stance towards equity-oriented MFs was partly due to lower returns over the past two years.Among equity categories, small cap funds led the inflows, attracting Rs 7,768 crore in July, followed by mid cap funds with Rs 6,192 crore and flexicap funds with Rs 4,710 crore. Large cap funds received Rs 1,322 crore during the month.The broader industry, however, witnessed a turnaround in July, recording a net inflow of a little under Rs 2.4 lakh crore, compared with a net outflow of Rs 52,949 crore in June. The reversal was driven by debt-oriented schemes, which attracted around Rs 1.9 lakh crore in July, reversing the Rs 1.1 lakh crore outflow recorded in June. Liquid funds emerged as the biggest beneficiaries, garnering net inflows of Rs 1.2 lakh crore, followed by overnight funds at Rs 40,413 crore and money market funds at 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 rose 4.3% month-on-month to just under Rs 85.8 lakh crore at the end of July. Amfi CEO Venkat Chalasani said the increase was largely driven by higher market value and sustained buying by domestic institutions. Agencies
