Mutual funds substantially increased equity investments in August, with net buying at Rs 70,500 crore.
This is the second-highest month-wise figure ever, just behind October 2024 when equity buying had stood at an all-time high of Rs 90,770 crore.
The healthy trend comes after July's hefty figure of Rs 42,702 crore, and it shows that momentum in secondary market buying by fund managers continues.
Industry experts opined the surge is a mix of strong inflows and pre-positioning in a volatility-marked market.
Meanwhile, India's mutual fund industry has been scaling new heights, with overall assets under management (AUM) at Rs 74.40 lakh crore, as per a recent Motilal Oswal Mutual Fund report.
Equity funds are still ruling the roost, commanding almost 60 per cent of the total assets.
The report further noted the growing importance of passive funds, which account for approximately 17 per cent of the industry's total AUM.
Investors are increasingly drawn to passive strategies because of their cost-effectiveness, transparency, and consistency with market benchmarks.
In the quarter to June, mutual funds saw estimated net inflows of Rs 3.98 lakh crore mainly led by debt schemes at Rs 2.39 lakh crore, while equities added Rs 1.33 lakh crore.
In active strategies, broad-based equity schemes—specifically Flexi Cap, Small Cap, and Mid Cap categories—were in favor, while passive large-cap schemes continued to attract consistent allocations.
Experts noted that the sharp rise in equity investments in August demonstrates fund managers' faith in India's market fundamentals, even in a time of global uncertainty.
With equity allocations at historic highs and passive investing increasingly popular, the mutual fund sector is set to continue as a key contributor to home market liquidity.
A different report from ICRA Analytics last month mentioned that the net AUM of equity mutual funds rose by 335.31 per cent to Rs 33.32 lakh crore in July, compared to Rs 7.65 lakh crore in July 2020.
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