How were the flows into mutual funds in October? Do you see any fresh trends emerging?

In fact, there are some very interesting trends that emerge from the mutual fund flow data put out by AMFI for the month of October 2021.

a) Debt is losing share of AUM even as equity and other assets are gaining share. The debt share in AUM is one of the lowest levels today and it figuring less in the allocation by retail. One can say it is due to bull rally and that is correct, but it is losing share.

b) Debt funds are now becoming more of treasury products for investors. That is what is making debt fund flows to become cyclical with the cycles of corporate and tax pay-ins and pay-outs. This will be the trend in future as retail dominates equity.

c) SIPs are literally coming of age. For the second month in succession, SIP flows were above Rs.10,000 crore. SIP folios are on target to touch 5 crore by Jan-22 and the SIP AUM is at 42% of total equity AUM. SIPs are making the participation more organized.

d) Hybrids and passive funds have emerged as serious alternatives to traditional equity and debt funds. The combined AUM of hybrid funds and passive funds today is more than 25% of overall AUM and growing rapidly.

e) In alternates, specific categories like balanced advantage funds, PSU Debt ETFs, gold funds and index ETFs are all emerging as important alternatives, apart from FOFs. This is good news as AUM basket gets diversified.

f) Lastly, the aura of big names is reducing. If you look at bottom performers in terms of flows, you find names like HDFC MF and Franklin Templeton. Today investors are focussing more on performance and less on pedigree or parentage. That has opened the doors for a lot of mutual funds to participate with a level playing field.