Mutual funds rebound after 3 months; inflow rises 21% to Rs 29,911 crore in Nov

After three months of slowing flows, equity mutual funds recorded a sharp rebound in November with inflows climbing 21 per cent to Rs 29,911 crore, buoyed by a supportive macro environment and resilient corporate earnings.

This improvement in flows also lifted the broader industry's asset base, with total assets under management rising to Rs 80.80 lakh crore in November from Rs 79.87 lakh crore in October, according to data released by industry body Amfi on Thursday.

"Equity-oriented schemes continued to drive growth, supported by sustained inflows. Hybrid and passive funds also saw healthy traction, with multi-asset and arbitrage funds together accounting for over 70 per cent of hybrid category flows," Venkat N Chalasani, CEO of Amfi, said.

However, retail participation via systematic investment plans (SIPs) showed marginal softness, with SIP inflows easing to Rs 29,445 crore from Rs 29,631 crore in October. Despite this dip, overall equity inflows strengthened, rising to Rs 29,911 crore in November from Rs 24,690 crore in the previous month, the data showed.

Flows, however, remain about 17 per cent lower year-on-year, and well below Rs 30,421 crore registered in September, Rs 33,430 crore in August and Rs 42,702 crore in July. Market experts caution that while the month-on-month improvement signals firmer investor sentiment, sustaining the momentum will be important.

The growth reflected sustained "investor confidence amid a supportive macro environment, resilient corporate earnings, and improving clarity around the global interest-rate trajectory", Himanshu Srivastava, principal research at Morningstar Investment Research India, said.

Within the equity segment, most sub-categories saw positive traction. Flexi-cap funds continued to dominate with Rs 8,135 crore in inflows, though slightly lower than October's Rs 8,929 crore. Large and mid-cap funds followed at Rs 4,503 crore, while dividend yield and ELSS funds were the only categories to record net outflows of Rs 278 crore and Rs 570 crore, respectively.

In contrast, debt mutual funds saw an outflow of Rs 25,692 crore in November after receiving a hefty inflow of Rs 1.6 lakh crore in the preceding month. Gold ETFs, meanwhile, saw a notable slowdown in momentum as net inflows dropped to Rs 3,742 crore from Rs 7,743 crore in October, pointing to a moderation in demand for safe-haven assets.