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The domestic mutual fund (MF) sector has continued to attract significant investment from individual investors seeking to exploit the booming stock markets. In September, actively managed equity schemes – which have nearly a dozen sub-categories – raked in Rs 34,419 crore in net inflows.
Although the tally is 10 per cent lower than the previous month, it remains comfortably higher than the trailing 12-month average of Rs 25,600 crore.
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Thematic funds consolidated their position as the largest equity mutual fund category with assets under management (AUM) of Rs 4.7 trillion, on the back of robust inflows of Rs 13,255 crore – the highest among all subcategories of actions.
Overall, the MF sector’s average assets under management reached Rs 68 trillion in September, up from Rs 66 trillion in the previous month.
The growth was driven by a 4 percent rise in the benchmark Nifty 50 index, even as the Nifty Midcap 100 and Nifty Smallcap 100 indices ended the month little changed.
Retail assets under management also crossed Rs 40 trillion for the first time, indicating the growing attractiveness of MFs. Retail’s share of MF’s total assets under management stands at 60 percent, up from 44 percent about a decade ago.
Retail assets under management doubled from Rs 20 trillion in August 2022.
Since then, the Nifty has surged 43 percent, supported by strong domestic inflows. Over the past 12 months, the equity benchmark has risen 27 per cent, driven by MFs’ purchases of Rs 3.4 trillion in stocks.
This investment was made through net inflows of Rs 3.3 trillion into the equity schemes. Flows into equity schemes remained positive for the 43rd consecutive month.
Much of this flow has come via the route of systematic investment plans (SIPs), in which investors commit a fixed sum every month.
In September, contribution via road hit a new record of Rs 24,509 crore, while SIP AUM also touched a record of Rs 13.82 trillion, according to industry body Amfi. The number of new SIPs registered last month stood at 6.64 million, taking the total number to 98.7 million, it said.
The contribution of debt programs to overall assets under management continued to decline thanks to combined outflows of Rs 1.14 trillion from the 16 sub-categories. The average assets under management of debt-focused open-ended schemes fell to Rs 16.1 trillion from Rs 16.22 trillion in August. Debt assets under management now represent less than 24 percent of the industry’s assets under management.
Foreign brokerage firm Nomura said in a note on Tuesday that India’s mutual fund sector has significant growth potential, despite the recent surge.
“The key themes that provide a long growth path for the AMC sector are significant under-penetration compared to other countries, increasing retailer participation, continued strong momentum in SIP flows and share growth of mutual funds as a percentage of gross household savings,” he says. said while projecting that equity assets under management will grow 20 percent annually over the next five years.
First publication: October 10, 2024 | 7:19 p.m. STI