Inflows into India’s equity mutual funds in August cooled from record highs, as steep U.S. tariffs rattled investors, prompting them to move to safe-haven gold and less risky large-caps.
Investors also continued to favour mid-cap stocks, while trimming allocations to small-caps, industry data showed on Wednesday.
Flows into equity schemes fell about 22% month-on-month to 334.3 billion rupees ($3.8 billion) in August, data from the Association of Mutual Funds in India showed.
The pullback in funds moving to small-cap and thematic funds weighed on overall equity flows.
Meanwhile, flows into gold exchange traded funds rose to a seven-month high of 21.9 billion rupees while flows into silver ETFs remained stable at 17.59 billion rupees, as investors preferred the safety of bullion.
The United States in August imposed an additional 25% tariff on Indian goods over New Delhi’s purchase of Russian oil, doubling the earlier 25% duty.
The initial impact of U.S. tariffs in the current financial year will be limited, but prolonged tariff uncertainty from the 25% penalty duty could weigh on the South Asian economy, India’s Chief Economic Advisor said on Wednesday.
“Global uncertainties, including foreign investor outflows, caution over valuations and intensified tariff war between India and U.S. may have also contributed to the softer pace in August,” said Himanshu Srivastava, principal of manager research at Morningstar Investment Research India.
Flows into large-cap mutual funds rose 33% month-on-month to 28.35 billion rupees, while those into mid-cap funds fell 1% to 53.31 billion rupees. Small-cap funds saw flows falling 23% to 49.93 billion rupees.
The mutual fund industry’s total assets under management stood at 75.19 trillion rupees, near the all-time high hit in July.
Systematic monthly contributions into mutual funds were steady at 282.65 billion rupees, just shy of July’s record high of 284.64 billion rupees.
Domestic flows cushioned the impact of $4 billion of foreign outflows, capping losses in August, when the benchmark Nifty 50 index slipped 1.4%, while smallcaps and midcaps declined about 4% and 3% respectively.
Inflows into India’s equity mutual funds cool from record highs in August
Inflows in large-cap and mid-cap mutual funds rise in August
Gold ETF inflows hits a seven-month high in August
SIP contributions in India’s mutual funds ease marginally from record high levels in August
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