Investments in equity mutual funds declined 61.6 per cent in August at a time when the equity benchmark indices are rising to new peaks. Inflows into equity mutual funds fell to Rs 8,666.68 crore from Rs 22,583.52 crore in July according to data of industry body Association of Mutual Funds in India (Amfi).

However, it is a sixth straight month when the mutual fund industry has reported inflows into equity schemes after eight months of outflow between July 2020 and February 2021.

According to market observers, there has been a change in the investment pattern in August with SBI Mutual Fund collecting around Rs 13,000 crore from NFO (New Fund Offer) of a balanced advantage fund. Overall net inflows in the balanced advantage category in August were Rs 16,570.97 crore compared to Rs 2,453.59 crore in July.

“A granular look at the data of equity and balanced/balanced advantage category suggests that the gross flow, the redemption and the net flow of July and August remains to be at the same elevated level. But, there is a significant shrinkage in the net inflow for equity category and corresponding bump up in net inflow of the balanced advantage category. This leads one to believe that on an aggregate industry level large balanced advantage NFO has garnered a lot of traction by way of switches from equity to balanced advantage category,” said Aashish Somaiyaa, CEO, White Oak Capital

“From a retail investors perspective in the short term, it may not be a bad development given the elevated market levels and the generally lower risk perception of balanced advantage funds,” he added.

Benchmark index Nifty scaled a new milestone of 17,000 in August, but analysts remain cautious.

“Since mid & small cap indices are trading close to resistance levels despite Nifty making new highs, overall market sentiment remains cautious and the market advance is still dominated by a handful of stocks,” said S Hariharan, head, sales trading, Emkay Global Financial Services.

“Big is certainly getting better in spite of a very severe second wave, large companies were able to control costs while maintaining pricing power to increase EBITDA margins and profitability. EPS growth over the next two years will eventually determine whether markets should sustain these valuations going forward,” said Umang Thaker, head of products, Motilal Oswal AMC.

Debt funds on the other hand saw an extremely steep fall in their monthly inflows, falling to merely Rs 1074.44 crore in August from Rs 73,694.04 crore in July when there was significant influx in liquid and money market schemes.

ETFs however saw a marginal rise in net inflows in August, peaking at Rs 11,591.72 crores from Rs 10,084.16 crores last month.

“SIP assets under management (AUM) reached a record high of Rs 5.26 lakh crores, which now forms a third of retail AUM. There was a healthy rise in SIP accounts at 4.32 crores and monthly SIP contribution was at an all time high at Rs 9923.15 crore,” said N.S. Venkatesh, CEO, AMFI.