Equity fund flows pick up in Feb even as SIPs get less

Synopsis

Equity mutual funds saw renewed investor interest in February, attracting significant inflows. This trend indicates a long-term outlook from investors, overlooking short-term market fluctuations. Gold ETFs continued to receive investments, though at a reduced pace. Conversely, silver ETFs experienced outflows as investors booked profits.

Mumbai: Flows into equity mutual funds resumed in February as investors continued to bet on stocks, shrugging off the uncertainty over the market prospects. Appetite for gold and silver exchange-traded funds (ETFs) - the top draws for investors in January - however, dwindled in February, with gold continuing to see inflows while silver saw redemptions.

Equity schemes garnered ₹25,977 crore, 8% higher than the flows in the previous month. Monthly systematic investment plans (SIPs) contributions fell 4% in February to ₹29,845 crore from January.

"The increase in inflows is a clear signal that investors are increasingly looking long-term and past short-term volatility," said Varun Gupta, CEO, Groww Mutual Fund.

Gold ETFs recorded net inflows of ₹5,255 crore during the month, a 78% decline from the record ₹24,040 crore seen in January. Silver ETFs registered outflows of ₹826 crore in February after attracting ₹9,463 crore the previous month.

The sharp run-up in gold and silver prices prompted investors to take some profits off the table, resulting in lower inflows in gold and outflows in silver, said analysts.

The total assets under management of mutual funds inched up to ₹81.77 lakh crore in February, compared with ₹80.76 lakh crore in the previous month.

Agencies

Sharp run-up in gold, silver prices prompts investors to take some profits off table

Debt schemes
Debt funds witnessed net inflows of around ₹42,106 crore, primarily driven by the liquid and money market categories.

"February's debt fund flows highlight a cautious investor approach, with positioning centred around liquidity, carry, and capital stability," said Nehal Meshram, senior analyst - Manager Research, Morningstar Investment.

Equity schemes
Among equity schemes, flexi-cap funds attracted the highest inflows of ₹6,924 crore in February, but the category witnessed a 10% decline in monthly inflows compared with ₹7,672 crore in January. Large-cap, mid-cap and small-cap funds saw a pick-up in flows.

In contrast, flows into dividend yield and focused funds dropped 56% and 42%, respectively.

Among hybrids, arbitrage funds witnessed an 82% drop in collections in February to ₹591 crore from ₹3,293 crore in the previous month.