December 10, 2023
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Mutual fund industry AUM nears Rs 50 trillion landmark
Equity-oriented mutual funds recorded a 22 percent decline in funds flow in November, still witnessing the 33rd straight month of net inflows, according to data released by the Association of Mutual Funds of India (AMFI), the industry trade body for mutual funds.
The segment recorded net investments of Rs 15,536.42 crore, which was 22.15 percent lower than Rs 19,957.17 crore recorded in October.
The equity segment was also aided by six new fund launches in November which garnered Rs 1,907 crore. None of the equity categories witnessed net outflows during the month.
The steady flows into equity mutual funds came amid strong domestic equity markets. During November, BSE Sensex climbed 4.87 percent, while the Nifty gained 5.52 percent.
“Diwali festivities and bank holidays probably affected equity net flows in November. Flows continued in multi-asset allocation category schemes where timing is left to the underlying schemes. SIPs continue to attract new investors with increasing awareness of benefits of SIP and mutual funds,” said Manish Mehta Head – Sales, Marketing & Digital Business, Kotak Mutual Fund.
In terms of systematic investment plans (SIPs), the number topped the Rs 17,000 crore level for the first time in November. During the month, the SIP book stood at Rs 17,073 crore against Rs 16,928 crore in October.
Boosted by the benchmark indices hitting all-time highs in November, the mutual fund industry’s assets under management (AUM) reached Rs 49.04 trillion.
Smaller cap funds in demand
Funds based on smaller market capitalization have been among the most desired among mutual fund investors this year, shows AMFI data.
In the equity category, small-cap and mid-cap mutual fund schemes continued to be in demand, as in November, these schemes received net inflows of Rs 3,699.24 crore and Rs 2,665.70 crore.
For the full year, small-cap funds have received net inflows of Rs 37,178 crore since January, while mid-cap funds saw Rs 21,520 crore net investment.
In contrast, large-cap funds have logged net outflows of Rs 2,687 crore since the start of the year. In November, large-cap funds saw small net inflows to the tune of Rs 307 crore.
“Fund flows into large-caps continue to be tepid, but investors continue to opt for index funds, pouring in Rs 1,353 crore for the month,” said Gopal Kavalireddi, Vice President of Research at FYERS.
Debt funds see outflows
In the fixed-income segment, debt mutual funds saw net outflows of Rs 4,706.70 crore in November, which was against Rs 42,633.70 crore net inflows in October.
Category wise, corporate bond funds saw net outflows of Rs 1,578.39 and ultra-short duration funds saw net selling of Rs 1,865.73 crore. On the other hand, money market and floater funds saw minor buying to the tune of Rs 865.34 crore and Rs 648.22 crore.
“Since the revision of tax laws, investments in fixed income funds have been notably subdued. The uncertainty surrounding interest rates has further complicated investment decisions for investors. Moreover, the robust performance of equity markets has been drawing increased attention from investors. Uncertainty over the timing of interest rate cut have led to few investors to choose money market and floater funds as part of the debt allocation in their portfolio,” said Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Research India.
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