Retail Investors Keep Faith in Mutual Funds Despite Market Volatility

Despite a volatile stock market, retail investors continued to pour money into mutual funds in January, with monthly gross SIP inflows remaining steady above Rs 26,000 crore, according to data from the industry body Amfi. This resilience showcases the enduring confidence of retail investors in the mutual fund sector, even as the Sensex experienced a slump.

Shift in Investor Preference: From Thematic to Hybrid Funds

The volatile market conditions have prompted a noticeable shift in investor preferences, with many moving away from thematic schemes to hybrid funds. This change is reflected in the net inflows, where hybrid funds saw a significant increase, taking in a net Rs 8,768 crore, up from Rs 4,370 crore in December.

Impact on Assets Under Management

Despite the steady inflows, there was a slight dip in total assets under management through the SIP route, from Rs 13.6 lakh crore in December to Rs 13.2 lakh crore. This dip is attributed to a reconciliation process carried out by RTAs and the exchanges following a regulatory directive, as explained by Amfi chief Venkat Chalasani.

Overall Growth in the Fund Industry

Despite the challenges, the fund industry's total AUM in January rose to Rs 67.3 lakh crore from Rs 66.9 lakh crore. This growth, albeit of a smaller magnitude, is noteworthy considering the mark to market losses due to the slide in stock prices in January. The resilience and adaptability of the mutual fund industry continue to attract investors, even in times of market uncertainty.