57% of equity MFs outperformed respective benchmarks in June; Multi Cap Funds lead: PL Wealth Management

PL Wealth Management, the wealth management arm of Prabhudas Lilladher, in its latest mutual fund performance analysis, observed that 57 percent of equity funds outperformed their respective benchmarks in June.

The study analysed 281 open-ended equity diversified funds and found that out of those, 159 funds or 57 percent outperformed their respective benchmarks over the past month ending on June 30, 2024.

It also reported that the AUM (assets under management) of equity mutual funds grew by 8.27 percent to ₹23,84,727 crore in June 2024 from ₹22,02,497 crore in May 2024 (excluding Sectoral/Thematic Funds).

PL noted that Multi Cap Funds emerged as the best-performing category, with 75 percent of the schemes outperforming their benchmarks. This was followed by Focused Funds and Mid Cap Funds, where 64 percent and 62 percent of the schemes, respectively, outperformed their benchmarks during June 2024.

17 out of 29 Large & Mid Cap Funds and 22 out of 39 Flexi Cap funds surpassed their respective benchmarks in performance in the last month. Among ELSS funds as well, 55 percent outperformed their benchmarks, with 23 out of 42 funds achieving this feat during the same period.

In contrast, Large Cap Funds were the worst-performing category, with only 32 percent of the funds outperforming their benchmark. Out of 31 funds, only 10 MF schemes outperformed against their respective benchmarks in June.

PL advised investors to stick to their SIP investments and keep a long-term focus. SIPs over the past 3 years have yielded a return in excess of 11 percent to 12 percent per annum on an average for the top quartile equity funds.

AMFI June data

In the previous month, inflows into equity mutual funds surged by a substantial 17 percent, reaching a record high of ₹40,608 crore. This increase was driven by ₹14,370 crore garnered through the launch of 11 new equity fund offerings (NFOs) and heightened inflows in sectoral/thematic funds.

Within the equity fund category, Sectoral/Thematic Funds attracted the highest inflows among equity funds, amounting to ₹22,351 crore in June, building up on ₹19,213 crore of flows in May, up 16 percent. Notably, Multi Cap Funds ranked second in terms of inflows among equity mutual funds, experiencing a 78 percent rise in inflows to ₹4,708 crore in June. Meanwhile, investments into largecaps increased by 46 percent to ₹970.49 crore.

Small Cap Funds received inflows of ₹2,263 crore last month, while Dividend Yield Funds saw the lowest inflow at ₹520 crore in June, compared to ₹445 crore in May.

With the exception of ELSS and Focused Funds, which experienced outflows for three consecutive months, all other categories reported inflows during June. Cumulatively in CY24, equity mutual funds received inflows amounting to ₹1.65 lakh crore.

Overall, the total assets under management of mutual funds grew by 4 percent, reaching ₹60.89 lakh crore in June, up from ₹58.64 lakh crore in May.

What experts make of the June MF data

June witnessed record-breaking inflows into equity mutual funds, marking a significant milestone for the mutual fund industry in India. Experts weigh in on the factors driving this surge and the implications for investors and the market.

Akhil Chaturvedi, Executive Director & Chief Business Officer, Motilal Oswal Asset Management Company

The record inflows in equity funds for June were driven by steady SIP flows, robust NFO collections, and lumpsum purchases during corrections. Investors shrugged off election results related volatility and as the uncertainty over government formation cleared, investors used the correction to add to their exposures. Overall, growing confidence among investors has spurred repeat investments contributing to this upward trend in flows and overall industry growth. We believe, investors have come of age and are using short term volatility as advantage for long term wealth creation. With budget around the corner, investor continue to be positive about their investments.

Jean Christophe Gougeon, Director & Chief Marketing Officer, Sharekhan, by BNP Paribas

Strong investor sentiments with regard to equity markets continued to drive net inflows in the equity categories. Under equity categories, over the last one year, we have seen the AUM almost double in Multi-cap (+96%) and Thematic (+95%) categories. This is probably due to NFOs in this space driving investor interest. We have seen AMCs launch topical themes such as Business Cycle, Manufacturing, and Innovation to capitalise on the investment opportunities in these categories.

Anand Vardarajan, Chief Business Officer, Tata Asset Management

June was a watershed month for the MF (mutual fund) industry, with the AUM (Assets Under Management) number hitting ₹60 lakh crore for the very first time. Ten years ago, in 2014, the industry was at ₹10 lakh crore. It is also important to note that exactly six months ago, we were at Rs. 51 lakh crore, and we have added Rs. 10 lakh crore in this period. The addition in six months is equal to what we were as an industry ten years ago!

This growth is a huge validation of the retailisation of the investor base and investors choosing mutual funds as a reliable investment vehicle for wealth creation.

Equity flows continue to be strong, and sectoral themes seem to be seeing strong interest. Most categories in equity have been positive, including Value and Contra, which were tepid until now. Multi-asset funds saw strong inflows as investors sought to diversify risk. Given the market stance, investors haven’t shied away from being in risk-on mode, with hybrids taking a breather while pure equity diversified funds, especially flexicap and multi-cap funds, are seeing higher interest.

The June data reflects a robust appetite for equity investments among Indian investors, buoyed by strategic SIPs, successful NFO launches, and a proactive approach to market volatility. As the industry continues to innovate with thematic funds and diversified portfolios, the mutual fund sector remains poised for sustained growth. Investors are embracing opportunities amidst economic shifts and upcoming fiscal policies, positioning themselves for long-term financial goals through mutual fund investments.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.