Multi-cap mutual fund inflow plummeted 90% in January; here’s why


After garnering large influxes of new fund offerings (NFOs) in December, multi-cap mutual funds have fallen out of favor. According to monthly data published by the Association
Mutual Funds in India (AMFI), net inflow into multi-cap funds in January fell to Rs 891 crore from a high of Rs 10,516 crore in December. Given the fall, inflows into equity-focused funds also fell by 40% in January to 14,887 rupees.
crore against Rs 25,076 crore collected in December. Debt driven schemes collected Rs 5,087.61 crore against an outflow of Rs 49,154 crore in December.

In December, inflows into multi-fund plans were mainly due to new funds launched during the same month. Three NFOs in the category – Axis Multi Cap Fund, HDFC Multi
Cap Fund and IDFC Multi Cap, had collected significant contributions.

Multi-cap funds invest in stocks of all market capitalizations, including large, mid and small cap stocks. The category offered an average return of 30%
in one year against an average return of 24% over a period of 3 years.

NS Venkatesh, Managing Director of AMFI, said: “Investor confidence in retail mutual funds in India’s growth story as evidenced by ever-higher volume of monthly income
SIP flows and with the economy expected to grow at an expected 9.2%, eclipsed uncertainties arising from external factors such as Fed rate hikes or FII outflows. The mutual fund asset class has been established as the preferred investment channel for
savings based on long-term goals. Retail investors adopt a rotational investment strategy in the event of rising rates and move their savings to the Hybrid category.

Monthly contributions to Systematic Investment Plans (SIPs) increased from Rs 11,305 crore in December to Rs 11,516 crore in January. Total assets under management (AUM)
in SIP stood at Rs 5.76 lakh crore in January from 5.65 lakh crore in December.

“Budget-focused capital spending leading to overall economic growth, increased opportunities for job creation, healthier corporate earnings growth will drive even higher volume of savings
in the mutual fund industry,” added Venkatesh.

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