Decoding SIP trends: Why Thematic/Sectoral and Hybrid Funds attracted more money in September

financialexpress.com:

Systematic Investment Plans (SIPs) hit a fresh all-time high of Rs.16,042 crore in September 2023. The growth in Net Assets under Management (AUM) was flat, with AUM at Rs.46.58 lakh crore. SIP AUM stood at Rs.8.70 lakh crore, against Rs.8.47 lakh crore in the previous month, according to AMFI’s monthly data.

However, net flows in mutual funds plunged to Rs.66,192 crore for September, owing to Rs.1.01 lakh crore (vs. Rs 25,873 crore in August) outflows from the debt category.

“Advance tax payments and other quarter-ending accounting and financial necessities resulted in an outflow of Rs.90,739 crore from 5 categories – Liquid, Money Market, Ultra Short Duration Overnight and Low Duration funds,” says Gopal Kavalireddi, Vice President – Research at FYERS.

Meanwhile, mutual fund inflows into thematic/sectoral funds continued to remain positive with the highest net inflows in September 2023 while hybrid funds also experienced an uptick in net inflows on a month-on-month basis.

Interestingly, small and mid-cap fund categories witnessed a decline in net inflows in September. (read more details here)

According to experts, the increase in hybrid fund investments could be attributed to investors’ renewed focus on capital protection.

“Hybrid funds experienced an uptick in net inflows on a month-on-month basis. This trend reflects the prevalent risk-off sentiment in the market, with investors seeking to diversify their investments while maintaining a focus on capital protection,” says Akhil Chaturvedi, Chief Business Officer, Motilal Oswal AMC.

The increased flows into hybrid and sectoral funds were also due to several new fund offers (NFOs) launched in the previous month.

“A total of 16 NFOs were launched in September, with 5