Fresh investments into equity-oriented mutual fund schemes witnessed a moderation in December 2024, even as the broader appetite for market-linked products remained resilient. According to the latest data released by the Association of Mutual Funds in India (AMFI), net inflows into equity mutual funds declined by over 6% to Rs 28,054 crore in December, compared to Rs 29,911 crore in the previous month of November.
Debt Schemes Face Massive Redemptions, Industry AUM Dips
The mutual fund industry was pulled into a net outflow zone primarily due to a sharp sell-off in debt-oriented schemes. Debt mutual funds witnessed massive net outflows of Rs 1.32 lakh crore in December, a significant jump from outflows of Rs 25,692 crore in November. This heavy redemption pressure led to the industry's total assets under management (AUM) dipping to Rs 80.23 lakh crore from Rs 80.80 lakh crore in the preceding month.
In contrast, the broader sales figures indicated sustained investor participation. "Equity gross sales increased by nearly 7% month-on-month to Rs 72,808 crore, while hybrid gross sales grew ~17% to Rs 16,548 crore," noted Akhil Chaturvedi, Executive Director and Chief Business Officer at Motilal Oswal Asset Management Company.
Flexi-Cap Funds Lead Equity Pack, Gold ETFs Shine Bright
Within the equity universe, most categories continued to attract money, with flexi-cap funds emerging as the most popular choice. Flexi-cap funds led the inflows with Rs 10,019 crore in December, up from Rs 8,135 crore in November, highlighting their appeal in uncertain market conditions. Other equity segments also saw healthy inflows:
- Mid-cap funds: Rs 4,176 crore
- Large and mid-cap funds: Rs 4,094 crore
- Small-cap funds: Rs 3,824 crore
- Large-cap funds: Rs 1,567 crore
However, Equity-Linked Saving Schemes (ELSS) and dividend yield funds were outliers, recording net outflows of Rs 718 crore and Rs 254 crore, respectively, likely due to profit-booking and year-end tax-related adjustments.
The standout story of the month was the soaring interest in gold exchange-traded funds (ETFs). Gold ETFs saw net inflows skyrocket to Rs 11,647 crore in December, a substantial increase from Rs 3,742 crore in November and Rs 7,743 crore in October.
Analysts See Profit-Booking, Not Risk Aversion
Commenting on the trends, industry experts interpreted the equity inflow moderation alongside robust gross sales as a sign of profit-taking rather than a loss of faith in equities. "Despite elevated redemptions, equity funds posted healthy net inflows of ~Rs 29,500 crore in December, reflecting profit-taking rather than risk aversion," added Chaturvedi. He also pointed out that hybrid funds remained net positive and that multi-asset allocation funds recorded their peak gross sales for the month.
The data paints a picture of a dynamic market where investors are actively rebalancing portfolios, moving away from debt funds, locking in profits in certain equity segments, and significantly increasing their allocation to safe-haven assets like gold through ETFs.
