Indices rise, but poor show by equity mutual funds in April

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The stock market indices did rebound in April but the money flowing into equity mutual funds dropped from 20,534 crore in March 2023 to a mere Rs 6,480 crore in April, recording a free fall of 68.44%. Among equity funds, mid and small-cap funds attracted most of the flows. While Rs 2,181 crore flowed into small-cap funds, Rs 1,791 crore went into midcaps. In comparison, large-cap funds put up a very poor show with Rs 63 crore only, revealed data from AMFI.

The Sensex rose by 3.59% in April while Nifty jumped 4.06% in the same month. Equity mutual funds are especially significant since common investors often equate them maximum returns during upturns of the market.

SIPs, too, dipped in the first month of the new financial year. AMFI data showed the amount through SIPs dipped from Rs 14,276 crore in March to Rs 13,728 crore in April.

Experts such as Kotak Mutual Fund national sales head Manish Mehta told ET that after putting a good amount of money into equity in March, investors could have taken a wait-and-watch approach, deciding to stay away from equity for the time being.

Fixed-income schemes attracted net inflows of Rs 1.06 lakh, out of which liquid funds, ultra-short-term funds and money-market funds accounted for Rs 88,000 crore. These were triggered by higher returns from short-duration instruments such as T-bills.

Index funds attracted Rs 147 crore. This category comprises both debt funds and passive equity funds. Index funds mimic the composition and performance of a market index and bear lower expense fees than actively managed funds.

Experts also indicated that companies could have parked their investible surplus into liquid funds and ultra-short-duration funds, thereby leading to a flood in these categories and a trickle in the equity funds.