Equity mutual fund schemes witnessed a 26% drop in inflows in February, amounting to ₹29,303 crore compared to ₹39,688 crore in January. The overall equity asset under management also decreased by about ₹2 lakh crore, standing at ₹27.40 lakh crore in February. This decline was primarily due to mark-to-market losses triggered by the sharp fall in key benchmark markets.
Additionally, the SIP contribution hit a three-month low at ₹25,999 crore, down from ₹26,400 crore in the previous month. The number of SIP accounts closed surged to 55 lakh, surpassing the number of new accounts opened at 45 lakh. Venkat Chalasani, Chief Executive of AMFI, noted that the industry eliminated around 25 lakh SIP accounts after a reconciliation process between the RTAs and exchanges. As a result, the number of SIP outstanding accounts decreased for the first time in recent years to 10.17 crore in February.
Inflows into equity funds, excluding focused funds, were lower compared to January. Thematic and flexi-cap funds attracted the highest inflows, with ₹5,711 crore and ₹5,104 crore, respectively. On the other hand, mid-cap and small-cap funds saw a dip in inflows to ₹3,406 crore and ₹3,722 crore, respectively. The inflow into thematic funds was boosted by seven new fund offers collecting ₹2,072 crore.
Despite short-term headwinds impacting investment flows, investor sentiment remains strong, according to Nehal Meshram, Senior Analyst at Morningstar Investment Research India. Investors are taking a cautious yet steady approach, reassessing their portfolios while maintaining long-term investment commitments. Anand Vardarajan, Chief Business Officer at Tata Asset Management, highlighted the paradox of risk, stating that risk increases when markets rise and decreases when markets fall. He also mentioned that if not for the fewer number of days in February, the inflows through SIP would have been on par with January.
Overall, the market conditions in February led to a decrease in equity inflows into mutual funds, reflecting the impact of global trade tensions and other external factors on investor confidence.
