Notwithstanding the heady inflows into equity mutual fund schemes, five of the 11 equity categories have registered a net outflow or lower inflow compared to last fiscal.
Interestingly, large-cap and focused funds have seen a net outflow of ₹613 crore and ₹4,060 crore in the year ended March against an inflow of ₹8,373 crore and ₹6,357 crore in FY’23, according to a FYERS research report.
Similarly, with the introduction of the new tax regime, equity linked saving schemes (ELSS) have lost their glory and inflows plunged 87 per cent to ₹1,040 crore (₹7,744 crore). The new tax regime provides for a lower tax rate but does not provide for any exemptions and deductions such as HRA, LTA, 80C, 80D and many more.
Inflow into the flexi-cap category was down nine per cent at ₹15,502 crore (₹16,961 crore) as investors preferred to book profit after the recent run-up in equity markets. In fact, Flexi-cap is the most sought-after as market regulator Sebi norms provide a free hand for the scheme fund managers to move across market cap without any restrictions.
Investment in the dividend yield category fell 11 per cent to ₹3,470 crore (₹3,892 crore) due to the lack of any new fund offer in this category.
However, inflows into equity mutual funds rose 25 per cent at ₹1.84 lakh crore (₹1.47 lakh crore) largely aided by a mad rush to invest in small and mid-cap schemes.
Investments in small and mid cap categories increased 82 per cent and 10 per cent respectively to ₹40,189 crore (₹22,104 crore) and ₹22,226 crore (₹20,206 crore). Net inflows into multi-cap fund doubled to ₹22,958 crore (₹11,420 crore)
Gopal Kavalireddi, Vice-President of Research, FYERS said investors seeking higher returns have shifted their portfolios towards mid and small cap segments of the market, rather than large-cap stocks.
While dividend yield funds, which focus on generating income, would have limited capital appreciation potential, the relevance of ELSS as a tax-saving option has decreased with the introduction of the new tax regime.
New-age investors are not just smart, but also evolving, well-tuned to the prevailing market dynamics and financial environment, he added.