Even though SIP investors have suffered losses during a year due to a major decline in the stock market, there is no possibility of much decrease in the speed of investment flow in equity mutual funds (MF). The fresh asset management (AUM) data of equity fund schemes has not indicated major withdrawal from major schemes. As of January 28, the AUM of largecap funds declined only 3.7 per cent from the end of December 2024, while the Nifty-100 index fell by 4.3 per cent.
According to data from the organization of mutual funds (Amphi) in India, the managed assets of smallcap funds declined by 11.5 per cent, while the Nifty Smallcap 250 index weakened by 14.7 per cent. Changes in AUM are based on two factors- changes in the value of assets related to investment coming or outing and market fluctuations.
Equity Fund schemes have not seen net monthly withdrawal since February 2021, as more than 3 crore new investors are associated with these with the strong performance of equity funds after Kovid and due to strong performance of equity funds. In 2024 alone, more than 1 crore new investors associated with funds, which increased the total number of investors to 5.26 crores.
Most of these investors have adopted SIP option for investment in equity fund schemes. However, one year SIP returns of most investors are currently in loss as almost all diversified equity schemes are damaged. The data of the advisorkose suggests that in the Flexicap category, 34 out of 38 schemes have deficient SIP returns over a period of one year. The worst performing scheme has lost about one-third of its investors’ capital.
Chirag Mehta, Chief Investment Officer of Quantum Mutual Fund, said, “The market was expensive from the evaluation point of view and hence needed a decline. This decline is a reality for investors who are investing more in equity despite expensive evaluation. Although we could not see the behavior of many new investors in the decline phase, there is no possibility of reducing investment in equity when most investors have a major decline in the market.
However, SIP investment accounts initiated three years ago are in good condition. The three -year average SIP return of regular flaxicap schemes is 16.3 percent CAGR. Investment flows in MF schemes in January have proved to be helpful for the stock market amid selling foreign institutional investors. During the month (till January 28) mutual funds have invested Rs 55,849 crore in shares.
According to analysts, however, the market has declined significantly. But this may not be the right time for large equity investment. He says that the evaluation in midcap and smallcap space is still expensive by looking at the fundamental. PGIM India Mutual Fund has said in its latest report, ‘After giving excellent returns for about 4 years, the hope of returns should be softened. Midcap and smallcaps are expensive even after the decline.