39% of equity MFs outperform respective benchmarks in July 2024, finds PL Wealth Management

PL Wealth Management, the wealth management arm of Prabhudas Lilladher, has released its latest analysis on the performance of equity mutual funds, highlighting that 39 percent of these funds outperformed their respective benchmarks in July 2024. The study provided insights into the performance of various fund categories, offering a detailed look at how different segments of the market fared during the month.

The analysis, which scrutinized 283 open-ended equity diversified funds, revealed that 109 of these funds, or approximately 39 percent, managed to surpass their benchmarks in July 2024. This marks a significant achievement, considering the challenges faced by the market in the current economic climate.

Additionally, the report noted a healthy growth in the assets under management (AUM) of equity mutual funds. The AUM grew by 5.37 percent, increasing from ₹23.84 lakh crore in June 2024 to ₹25.12 lakh crore in July 2024, excluding sectoral and thematic funds. This growth reflects the increasing investor confidence and the resilience of equity mutual funds in the current market environment.

Key Findings from the Analysis

Among the various categories of equity funds, Value Contra Div. Yield Funds emerged as the top performers, highlighted PL. It observed that an impressive 78 percent of these schemes outperformed their benchmarks, making this category the best-performing segment in July. Large Cap funds followed closely, with 58 percent of schemes outperforming their respective benchmarks, while Multi Cap funds saw 40 percent of their schemes exceeding benchmark performance during the same period.

Specifically, the report highlighted that 25 out of 32 Value Contra Div. Yield Funds and 18 out of 31 Large Cap funds outperformed their benchmarks in July. Additionally, 10 out of 25 Multi Cap funds managed to surpass their benchmarks, showcasing strong performance across these segments, noted the report.

The report also provided insights into the performance of ELSS (Equity Linked Savings Scheme) funds, where 36 percent of funds outperformed their benchmarks. Out of 42 ELSS funds, 15 achieved this milestone in July. Flexi Cap, Mid Cap, and Focused funds also showed mixed results, with 33 to 38 percent of schemes in these categories outperforming their benchmarks.

However, not all categories performed well. Small Cap Funds, in particular, struggled significantly, with none of the 28 schemes in this category managing to outperform their benchmarks. Large & Mid Cap Funds were the second least-performing category, with only 24 percent of funds beating their benchmarks. Out of 29 funds in this segment, just 7 schemes managed to outperform in July, informed the report.

In light of these findings, PL Wealth Management advised investors to stay committed to their Systematic Investment Plans (SIPs) and maintain a long-term investment focus. The report emphasized that SIPs have proven to be a reliable investment strategy, with top quartile equity funds delivering annual returns of over 11 to 12 percent on average over the past three years.

July AMFI Data

Inflows into open-ended equity mutual funds dropped by 8.61 percent to ₹37,113.39 crore in July, according to data released by the Association of Mutual Funds of India (AMFI) on August 9. This decline comes after equity mutual fund inflows had surged by 17 percent to a record ₹40,608.19 crore in June. The decrease was mainly due to reduced investments in large-cap and mid-cap funds.

Large-cap funds saw a sharp 31 percent drop in inflows, falling to ₹670.12 crore, while both mid-cap and small-cap funds also experienced slower investment momentum. Despite this, small-cap funds still managed to attract net inflows of ₹2,109.20 crore, and mid-cap funds secured ₹1,644.22 crore in new investments for the month.

In a notable shift, hybrid funds saw a significant surge in inflows, climbing to ₹17,436 crore in July from ₹8,855 crore in June, reflecting growing investor confidence in diversified portfolios that blend equity and debt. Meanwhile, sectoral and thematic funds attracted ₹18,386.3 crore, down from ₹22,352 crore in the previous month, indicating a possible shift in investor focus within specific sectors and themes.

However, the monthly gross inflows from systematic investment plans (SIPs) reached a new high of ₹23,332 crore in July, up from ₹21,262 crore in June. Open-ended equity fund inflows have now remained positive for 41 consecutive months. Additionally, the SIP AUM also hit an all-time high, rising to ₹13,09,385.46 crore in July, compared to ₹12,43,791.71 crore in June 2024.

In July, the mutual fund industry’s net assets under management (AUM) soared to ₹64,96,653.14 crore, surpassing the ₹60 lakh crore milestone for the first time, which was achieved in June. During the month, around 15 new fund offers (NFOs) were launched, raising a total of ₹16,565 crore.

The July 2024 performance analysis by PL Wealth Management underscores the importance of careful fund selection and the benefits of a diversified investment approach. While certain fund categories like Value Contra Div. Yield and Large Cap funds showed strong performance, others like Small Cap Funds faced challenges. Investors are encouraged to continue their SIPs and stay focused on long-term goals to navigate the fluctuations in the market successfully.

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