Inflows into equity mutual funds stood at ₹18,917 crore in April, a 16 per cent drop over the previous month, data from the Association of Mutual Funds in India (AMFI) showed.

Small-cap funds, which saw outflows of ₹94 crore in March after SEBI mandated stress tests, were back on investor radar, registering net inflows of ₹2,209 crore. Sectoral/thematic funds cornered 27 per cent or ₹5,166 crore of the total flows. Multi-cap funds, large & mid-cap funds, and flexi-cap funds saw flows of over ₹2,000 crore each. Flows in large-cap funds, however, declined 83 per cent to ₹357 crore.

Equity flows positive

Equity flows were positive for the 38th consecutive month. “We are seeing heightened activity towards sectoral/thematic funds. Our recommendation is that diversified funds would be a better bet for the long term over such funds specially when valuations are on the higher side,” said Chandraprakash Padiyar, Senior Fund Manager, Tata Asset Management.

KYC issues

Flows via systematic investment plans, a monthly contribution, touched a new high of ₹20,371 crore despite KYC related issues faced by the industry last month. 93 per cent of MF accounts have KYC Validated or KYC Registered status; 3 per cent of accounts have ‘KYC Hold’ status, while another 4 per cent have not done their KYC. “The mutual fund industry is addressing concerns for a smooth process. Together with AMCs, distributors and other stake holders, we are committed to facilitating a seamless KYC validation process for all, thereby ensuring the integrity and accessibility of mutual fund investments across the board,” Venkat Chalasani, Chief Executive, AMFI.

Chalasani said AMFI had set up a committee that would create an institutional framework for preventing front-running at AMCs within a month.

Hybrid schemes received inflows of ₹19,863 crore, aided by ₹13,901 crore of inflows into arbitrage funds. With stock markets remaining volatile and other asset classes like gold and real estate on a stronger footing, investors continued to deploy their capital into multi-asset allocation funds (₹3,313 crore).

Debt-oriented schemes saw inflows of ₹1.9 lakh crore, primarily fuelled by investments in liquid funds, money market funds and overnight funds. Gilt funds and corporate bond funds saw flows of ₹5,210 crore and ₹2,992 crore, respectively. “This surge in inflows can be attributed to factors such as quarter-end demands for advance tax, diminishing year-end redemptions and continued volatility in the stock markets, leading investors to favour cash for short-term investments,” said Gopal Kavalireddi, Vice President of Research at FYERS.

In April, the number of new fund offerings was lower, with only 9 new schemes launched, raising a total of ₹1,532 crore. This is a decrease from March, which saw 19 schemes launched, raising ₹4,146 crore. The assets under management of the MF industry stood at ₹57.3 lakh crore at the end of April, a 7.2 per cent increase over the previous month.