Topic 6: MUTUAL FUNDS: MARKET VOLATILITY TESTS

The performance of equity mutual funds was affected by the overall market decline. While many funds had previously shown strong returns, the volatility in October led to a mixed performance across different categories - Large Cap Funds generally performed better compared to mid and small-cap categories, as they are often more resilient during market downturns. Whereas Mid Cap and Small Cap Funds faced greater challenges, with many funds experiencing declines in returns due to their higher sensitivity to market fluctuations. Despite the market challenges, the assets under management (AUM) for equity mutual funds saw a sequential increase of about 3.10%, reaching approximately ₹26.43 lakh crore. This growth was largely supported by continued inflows from domestic institutional investors (DIIs), including mutual funds and employee provident funds (EPFO). Sectoral and thematic funds gained traction as investors looked for targeted opportunities in infrastructure, healthcare, and financial services. The volatility in equity markets attracted the investors to the debt mutual funds for the safer investment options. Liquid and corporate bond funds remained particularly attractive to investors looking for stability and reasonable returns in a fluctuating economic environment. Hence the debt mutual fund also experienced the mixed performance due to external market pressures and geopolitical concerns. The overall environment highlighted a shift towards more strategic investments within the mutual fund landscape amidst broader market uncertainties.



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