Equity mutual funds witness 16% drop in April

Equity mutual funds experienced a 16 per cent decline in inflows, amounting to Rs 18,917 crore in April, attributed to reduced inflow in large-cap funds and heightened market volatility preceding elections. Despite this decrease, monthly Systematic Investment Plan (SIP) contributions soared past the Rs 20,000 crore mark, reaching an unprecedented high of Rs 20,371 crore compared to Rs 19,271 crore in the preceding month.

Data from the Association of Mutual Funds in India (AMFI) revealed that April marked the 38th consecutive month of net inflows in equity funds, beginning from March 2021. Furthermore, SIP accounts surged to 8.7 crore, with 63.65 lakh new registrations recorded during the month.

The mutual fund industry witnessed a substantial inflow of Rs 2.4 lakh crore in April, following an outflow of Rs 1.6 lakh crore in March. This surge in inflows was primarily driven by investments of Rs 1.9 lakh crore into debt schemes.

As a result of strong inflows in both equity and debt categories, the industry's net assets under management rose to Rs 57.26 lakh crore last month from Rs 53.54 lakh crore in March-end.

Equity-oriented schemes received an inflow of Rs 18,917 crore in April, significantly lower than the previous months of March (Rs 22,633 crore) and February (Rs 26,866 crore). Market experts attributed this decline to heightened market volatility during the pre-election phase, prompting cautious investor behaviour.

The launch of nine schemes in the open-ended scheme category raised a total of Rs 1,532 crore in April. Despite an outflow of Rs 144 crore in equity-linked saving schemes (ELSS), all other equity segments experienced inflows. Sectoral or thematic funds remained the top contributors with inflows of Rs 5,166 crore, followed by the multi-cap category with net inflows of Rs 2,724 crore.

In addition to equities, hybrid funds saw a notable increase in inflows, reaching Rs 19,863 crore compared to Rs 5,584 crore in March 2024. This significant inflow can be attributed to institutional reinvestment in arbitrage funds.

Debt-oriented schemes experienced robust inflows of Rs 1.9 lakh crore, primarily driven by investments in liquid funds (Rs 1.02 lakh crore), money market funds (Rs 34,000 crore), and overnight funds (Rs 21,000 crore).

The surge in mutual fund folios reached an all-time high of 18.14 crore in April, with retail MF folios, comprising equity, hybrid, and solution-oriented schemes, hitting an all-time high of 14.54 crore.

(With PTI inputs)