Passive Fund Inflows Down 13% in August; Investment in Gold ETFs Up 67%

August witnessed a moderation in the flow of fresh investments in passive mutual funds, while the investment in gold ETFs surged significantly. 

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During August, net inflows in passive funds stood at ₹10,876 crore, which was 13% lower than ₹12,517 crore of net inflows in July, as per figures revealed by Association of Mutual Funds in India (AMFI). 

Nevertheless, the fall was not consistent across categories. While gold ETFs witnessed a significant surge in investments, the monthly flow into index funds almost halved compared to July. 

Inflows to Gold ETF Soar by 67% 

The gold ETF segment was one of the better performing categories in August, witnessing inflows of ₹2,597 crore compared to ₹1,559 crore witnessed in July. This means that there is a jump of 67% on a month-on-month basis. 

Also, the AUM in this segment was higher, having climbed to ₹1.91 lakh crore in August from ₹1.73 lakh crore in July. 

The silver ETFs, on the other hand, witnessed inflows of ₹1,271 crore in August, down by a little bit from ₹1,285 crore witnessed in July. 

Despite a slight fall in new inflows, the silver ETF AUM has jumped by 11.5% to ₹85,488 crore from ₹76,676 crore in July. 

ETFs Account for Bulk of Passive Fund Inflows 

Passive funds include ETFs, index funds and fund of funds (FoFs). 

ETFs accounted for most of the money entering passive products during August, recording net inflows of ₹10,161 crore. 

Within this segment, equity ETFs attracted ₹7,237 crore. Their total AUM stood at around ₹8.18 lakh crore at the end of the month. 

Index funds brought in another ₹787 crore, while FoFs recorded a net outflow of ₹72 crore. 

Index Fund Inflows Plunge by 49% 

The moderation was especially pronounced in index funds. 

Net inflows into the fund type declined to ₹787 crore in August from ₹1,537 crore in July, marking a fall of nearly 49%. 

Among index funds, equity-index schemes witnessed ₹2,394 crore of flows. The debt index funds had an outflow of ₹1,610 crore. 

The contrast between the two fund types contributed to a decline in index-fund inflows overall in comparison to the previous month. 

Fund of Funds Witness ₹72 Crore Outflow 

Fund of funds registered negative flows in August too as net outflows were seen at ₹72 crore. 

Even then, the assets under management in the fund type rose to ₹48,548 crore from ₹46,352 crore in July. 

Overall, passive fund AUM was ₹15.41 lakh crore at the end of August, down from ₹15.61 lakh crore at the end of the previous month. 

Overall, August turned out to be a mixed bag for passive funds. While overall inflows were down by 13% from the previous month at ₹10,876 crore and index-fund flows slumped, gold ETFs registered a reverse movement, witnessing a flow of ₹2,597 crore, up by nearly 67% from July.