Equity mutual fund inflows rise 19% to Rs 29,315 crore in August; SIPs hit record high

Equity mutual fund inflows rose nearly 19% month-on-month to Rs 29,315 crore in August, from Rs 24,685 crore in July, according to data released by the Association of Mutual Funds in India (AMFI). The increase came as investors continued to favour small- and mid-cap funds, while large-cap schemes recorded outflows for the second consecutive month.

The August inflow was Rs 4,630 crore higher than in July, translating into an 18.8% monthly increase. Among equity-oriented categories, small-cap funds attracted the highest inflows of Rs 7,973 crore, compared with Rs 7,767 crore in July.

Mid-cap funds followed with inflows of Rs 6,989 crore, while flexi-cap funds received Rs 5,059 crore during the month. Small-cap inflows were at their highest level in at least two years, while mid-cap inflows reached a level that was at least a one-year high.

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Investors favour small and mid caps

Large-cap funds, in contrast, recorded an outflow of Rs 1,147 crore in August, marking their second consecutive month of withdrawals. Sectoral and thematic funds also saw outflows of Rs 53 crore and Rs 1,766 crore, respectively.

Value funds received Rs 24 crore, while contra funds attracted Rs 1,328 crore. Dividend yield funds recorded an outflow of Rs 133 crore and ELSS funds saw withdrawals of Rs 1,078 crore.

Sandeep Bagla, CEO of TRUST Mutual Fund, attributed the relatively weaker flows into large-cap funds to limited investor excitement around the large-cap index, which has significant exposure to sectors such as BFSI, IT and FMCG.

According to Bagla, performance and flows in these funds have remained subdued amid valuation concerns and slower growth in some of these sectors. He said investor interest has shifted towards small- and mid-cap stocks, supported by stronger earnings growth.

Bagla added that more earnings upgrades are taking place among mid- and small-cap companies compared with large-caps, with incremental earnings growth increasingly coming from these segments. He expects stronger flows into mid- and small-cap funds to continue for at least another six months.

SIP contributions hit record high

Investor participation through systematic investment plans (SIPs) remained strong. Monthly SIP contributions rose to an all-time high of Rs 32,297 crore in August, from Rs 31,115 crore in July, an increase of 3.8%.

The industry registered 66.39 lakh new SIP accounts during August, while 53.82 lakh SIP accounts were discontinued during the month.

Meanwhile, exchange-traded funds (ETFs) recorded total inflows of Rs 10,161 crore. Equity ETFs accounted for Rs 7,237 crore, while gold ETFs attracted Rs 2,597 crore and silver ETFs received Rs 1,271 crore.

Specialised Investment Funds also recorded inflows of Rs 7,699 crore during August.

On the debt side, mutual funds recorded an outflow of Rs 8,127 crore, sharply reversing the Rs 1.87 lakh crore inflow seen in July. Liquid funds received the highest inflow among debt categories at Rs 19,934 crore, followed by money market funds at Rs 11,734 crore. Overnight funds recorded the largest outflow