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New Delhi, Strong, incessant net flows and favourable market conditions propped up the assets base for the small-cap mutual fund category to cross Rs 2 lakh crore mark in November-end, a sharp surge of 69 per cent from a year earlier. On a month-on-month basis, the Assets Under Management (AUM) of the category grew 10 per cent to Rs 1.99 lakh crore, data with the <keyword id="826589" type="General" weightage="80" keywordseo="association-of-mutual-funds" source="Orion">Association of Mutual Funds</keyword> in India (AMFI) showed. Since the fourth quarter of 2019-20, the AUM for the category has seen a phenomenal rise, due to favourable market movement, along with record net inflows. Small-cap funds attracted Rs 37,178 in this year (till November). This includes Rs 3,699 crore last month and a record fund infusion of Rs 4,495 crore in October. On the other hand, the large-cap category saw a pull out of Rs 2,688 crore in the first 11 months of this year. "A few fund houses have limited the inflows in their small-cap funds over the last quarter given the sharp rise in flows and concerns on valuations," <keyword id="112974" type="General" weightage="80" keywordseo="morningstar-india" source="Orion">Morningstar India</keyword> had mentioned in its September quarterly report. Going by the AMFI data, the asset base of the small-cap mutual fund hit its peak of Rs 2.2 lakh crore at the end of November. Additionally, investor accounts in the category, too, climbed a staggering 62 lakh folios to 1.6 crore in November from 97.52 lakh a year-earlier. This shows that investors have become more inclined toward small-cap funds. Under Sebi's rule, in small-cap mutual funds, fund managers are required to invest at least 65 per cent of their portfolios in small-cap stocks. <keyword id="2252616" type="General" weightage="80" keywordseo="g-pradeepkumar" source="Orion">G Pradeepkumar</keyword>, CEO, <keyword id="6536298" type="General" weightage="80" keywordseo="union-asset-management-company" source="Orion">Union Asset Management Company</keyword>, suggested that investors stagger their investments in small- and mid-cap funds in view of the possibility of short-term volatility. Overall, the AUM of the 42-player mutual fund industry reached Rs 49.04 lakh crore in November-end from Rs 40.37 lakh crore in November 2022, suggesting a gain of 22 per cent.

Consistent inflows push small-cap funds AUM past Rs 2 lakh cr mark in Nov

<ul><li>Investments in gold ETFs grew by a whopping 472% at ₹841 crore in October ‘23.</li><li>Despite words of caution by experts, <keyword id="6416579" type="General" weightage="20" keywordseo="retail-investors" source="Orion">retail investors</keyword> continue to bet on midcap funds for better returns, thanks to government policies.</li><li>The weight of automobiles in overall allocation jumped to an almost 5-year high of 8.4% (up 10 bps MoM and 70 bps YoY) in October 2023. </li></ul> All that glitters is gold when it comes to the festive season in India. A month ahead of Diwali, retail investors chose to tank up on gold funds, going by data released by the Association of Mutual Funds of India (AMFI). Moreover, the weightage on sectors like auto, utilities and insurance stocks increased significantly while sectors such as banking saw a moderation. Investments in gold ETFs (exchange traded funds) grew by a whopping 472% at ₹841 crore in October compared to ₹147 crore in the same period last year. But that is not all, retail investors are now mature and picking themes with a view on higher value creation over the long term. The month of October reflects this trend quite clearly. As large caps continue to struggle, retail investors continue to bulk up on small and midcap funds that have already delivered over 40% returns this year. After a short blip in September, small cap funds attracted higher inflows to the tune of around ₹4,495 crore in October, up from ₹2,678 crore in September. According to ICRA Analytics, for a country to grow it should grow intrinsically strong and adopt a bottoms-up approach. The government is focusing on this and is making policies to strengthen such small companies. This is likely to augur well for small and mid-sized firms and would help in higher value creation. G. Pradeepkumar, CEO, Union Mutual Fund, says: “If one takes into account the allocations to mid and small caps in categories such as multicap, flexicap and large &amp; mid Cap, it appears that anywhere from 40% to 50% of the total net flows could have gone to mid and small-cap stocks. While the long-term outlook for these companies is positive, investors should remain cautious about the possibility of short-term market volatility and consider a staggered approach to their investments.” It is not just betting on smaller stocks that will lead to higher value creation that shows that the Indian retail investor has evolved. Analysis shows that the pace of redemptions slowed down to Rs 26,000 crore (down 14.8% month-on-month). Consequently, net inflows accelerated to ₹22,000 crore in October from ₹15,500 crore in September 2023. Financialisation of savings is a big trend that has been playing out since 2016 in India. The retail investor’s faith in the India story has not faded despite the headwinds. Explains Ashwini Kumar, Head Market Data, ICRA Analytics, “Net inflows during the month of October 2023 have grown by a whooping 473% at ₹80,528 crore, as against ₹14,047 crore in October 2022.” The sectoral shift The story gets even more interesting when one digs deeper into the monthly flows. Net inflows into equity-oriented schemes grew by 113% at ₹19,957 crore in October, up from ₹9,390 crore in the same period last year. According to analysis done by Motilal Oswal Financial Services (MOFS), the month saw notable changes in the sector and stock allocation of funds. Retail investors are doubling down on automobiles, utilities, consumer and insurance sectors. On a MoM basis, the weights of all these sectors increased while that of banks (Private &amp; PSU) , technology, capital goods, and metals moderated. The weight of automobiles jumped to an almost five-year (59-month) high of 8.4% (up 10 basis points month-on-month and +70 basis point year-on-year) in October 2023. Utilities’ weight climbed for the second consecutive month to a 38-month high of 3.9% (+10bp MoM, +60bp YoY), says MOFS. The weightage for private banks moderated for the fourth consecutive month to 18.7% (-20bp MoM, flat YoY) in October 2023. PSU Banks overall weight declined to 3% (-20bp MoM, -70bp YoY) and this is the lowest since February 2021.

It’s not banks but insurance that the retail investors now fancy

New Delhi, Feb 12 () Investors pumped Rs 1.2 lakh crore into various mutual fund schemes in January, after pulling out a massive Rs 62,000 crore in the preceding month, primarily on account of infusion in liquid and overnight schemes. Mutual fund inflows will gather further momentum in the coming months, Union Asset Management Company CEO G Pradeepkumar said. According to data by the Association of Mutual Funds in India (Amfi), net inflow of Rs 1.2 lakh crore was witnessed in mutual fund schemes last month as compared to an outflow of Rs 61,810 crore in December. Fund managers attributed the growth in asset base to strong inflow of around Rs 1.09 lakh crore in debt-oriented schemes. Among debt-oriented schemes, liquid funds, with investments in cash assets such as treasury bills, certificates of deposit and commercial paper for shorter horizon, received flows worth about Rs 59,683 crore, the highest among the fixed-income segment last month. In addition, overnight funds, which invest in securities with maturity of one day, received inflow of about Rs 22,652 crore. "On the fixed-income side one of the noticeable trends is a shift away from liquid funds toward overnight funds. With the introduction of exit load in liquid funds and certain additional restrictions that will come into effect from April 1, 2020, we expect this trend to continue," Pradeepkumar said. The open-ended equity and equity-linked saving schemes witnessed an infusion of Rs 7,877 crore, while there was an outflow of Rs 330 crore in close-ended equity plans, taking total equity inflows to Rs 7,547 crore last month. In December, net inflows in such schemes stood at Rs 4,432 crore. Small-cap, mid-cap and large-cap funds saw inflows of Rs 1,073 crore, Rs 1,798 crore and Rs 1,154 crore, respectively, in January. It is interesting to note this flow is well spread between the category of funds such as large-cap, mid-cap and multi-cap, among others. During January 2020, Nifty Midcap 100 and Nifty Smallcap 100 rose 5.31 per cent and 6.71 per cent, respectively. "With overall sentiments improving on the back of softer crude oil prices and lower interest rates as also unconventional steps taken by RBI recently has led to expectations of further softening of interest rates. These factors should help to sustain the growth in equity markets in the near term," Pradeepkumar added. Nippon Life India Asset Management ED and CEO Sundeep Sikka said, "With the Union Budget 2020 and subsequent RBI policy leading several structural changes, we will continue to stay optimistic on the market outlook. The retail investors may continue investing in the markets through SIPs (systematic investment plans), while staying balanced in their investing approach between different asset classes". SPRVK

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Consistent inflows push small-cap funds AUM past Rs 2 lakh cr mark in Nov

PTI

It’s not banks but insurance that the retail investors now fancy

Malini Bhupta

Mutual funds log Rs 1.2 lakh cr inflow in Jan on infusion in liquid schemes

PTI

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