The sharp inflow into money-market funds came after an outflow of ₹65,530 crore in June.
Fixed-income funds also saw a reversal, with ₹5,947 crore flowing in during July against an outflow of ₹53,006 crore in June.
At the same time, inflows into precious-metal funds fell to ₹4,084 crore in July from ₹8,680 crore in June, despite gold’s strong performance, Vallum Capital said.
Equity flows
The preference for safer assets did not mean investors stayed away from equities. SIP contributions rose 12% year-on-year to ₹31,961 crore in July, while the number of SIP accounts increased 12.5% to 10.63 crore, according to Franklin Templeton India’s review of the mutual fund industry.
The average SIP contribution, however, edged down to ₹3,007 a month from ₹3,012 a year earlier.
The mutual fund industry’s assets under management reached a record ₹85.8 lakh crore in July. Equity fund AUM rose 15.3% year-on-year to ₹38.40 lakh crore, while passive fund AUM increased by more than 24%.
Where investors put their money
Small-cap and mid-cap funds continued to see strong flows, attracting ₹7,768 crore and ₹6,192 crore, respectively, according to Franklin Templeton.
Micro-cap stocks gained 4.6% in July, while small-cap stocks rose 2.8%, according to Vallum Capital.
The data suggests that investors were not simply chasing the best-performing assets in July. While SIP and equity flows remained strong, the sharp rise in money-market and fixed-income allocations indicated a parallel preference for liquidity and relatively lower-risk investments.
Vallum Capital attributed gold’s strong July performance to a weaker-than-expected US jobs report, which temporarily eased expectations of another US Federal Reserve rate hike. Easing US Treasury yields also supported the metal during the month.
