SIPs reach all-time high of Rs 18,838 cr

New Delhi: Equity mutual funds (MFs) attracted a net inflow of Rs21,780 crore in January, making it the highest monthly infusion in nearly two years, propelled by investors’ continued preference for small-cap funds and huge contributions from thematic funds. Also, the latest flow was about 28 per cent higher than inflows of Rs16,997 crore seen in December despite slight volatility in equity markets.

Moreover, monthly Systematic Investment Plan (SIP) contributions reached an all-time high of Rs18,838 crore, surpassing December’s Rs17,610 crore, according to the data released by the Association of Mutual Funds in India (AMFI) on Thursday.

Further, SIP accounts surged to 7.92 crore in January along with a milestone of 51.84 lakh new SIP registrations. “Despite January’s volatility, equity mutual funds displayed resilience. This sustained confidence in equity MFs amidst market fluctuations underscores investors’ commitment to long-term wealth creation strategies,” said Pankaj Shrestha, head (investment services), at Prabhudas Lilladher.

The flow in January was the highest since March 2022, when equity-oriented mutual funds witnessed an inflow of Rs28,463 crore. Also, the latest flow marks the 35th consecutive month of net inflows in equity funds. The equity segment was also aided by three new fund launches in January which garnered Rs967 crore cumulatively, Melvyn Santarita, Analyst, Morningstar Investment Research India, said.

Barring focused funds, all categories experienced inflow in equity segments. Thematic and small-cap oriented funds were the primary contributors to the inflows in equity funds as they attracted Rs4,805 crore and Rs3,257 crore respectively. In addition, multi-cap funds witnessed an inflow of Rs3,039 crore. Though small-cap funds garnered more than Rs3,000 crore of net flows for the fourth consecutive month, the quantum was lower by Rs600 crore on a month-on-month basis. Interestingly, fund flows into the large-cap category at Rs1,287 crore, which was at the highest level in 19 months. This came following a withdrawal of Rs281 crore in December. “With midcaps at 15 per cent and small caps at 20 per cent premiums, investors are realising the considerable valuation gap with the large-cap segment, and accordingly making adjustments to their investments,” Gopal Kavalireddi, Vice President of Research at FYERS, said.

Akhil Chaturvedi, Chief Business Officer, Motilal Oswal AMC, said that large-caps demonstrated positive contributions in January, reversing the net outflows experienced in December 2023. This shift in trend is in line with valuation differentials among large v/s mid and small caps, suggesting that large caps/flexi caps oriented schemes may attract higher flows in the future.