Mutual Fund industry’s AUM may cross Rs 100 lakh crore mark in a few years

After having crossed the landmark of Rs. 50 lakh crore in December, the AUM of the domestic mutual fund industry is all set to cross the Rs. 100 lakh crore milestone in the next few years. Not to mention, the Indian mutual fund industry witnessed more than 27 per cent growth in net Assets Under Management (AUM) to touch Rs. 50.78 lakh crore in December. The net AUM stood at Rs. 39.89 lakh crore in December 2022. Average Assets under Management (AAUM) of the industry stood at Rs. 51.09 lakh crore, up from Rs. 40.76 lakh crore in the year-ago period. Factors which could be attributed for the stellar performance are galore. First, inflows into equity mutual fund under open ended category surged by nearly 133 per cent to touch Rs. 16,997 crore from Rs. 7,303 crore a year ago by strong macroeconomic fundamentals and resilient earnings growth. Secondly, while all equity fund categories recorded good net inflows, sectoral/thematic fund, small caps and large and mid-cap funds clearly were outperformers.

Thirdly, the small cap funds witnessed inflows to the tune of Rs. 3858 crore, large and mid-cap Rs. 2339 crore; sectoral/thematic funds saw net inflows of Rs. 6005 crore while multi-cap funds saw inflows to the tune of Rs. 1852 crore. Moreover, debt mutual funds under open ended category witnessed 244 per cent rise in net outflows at Rs. 75,560 crore from net outflows of Rs. 21,947 crore for the same period last year, with 12 out of 16 fund categories witnessing outflows during the month. Besides, SIP numbers also remained robust at more than Rs 17,000 crores for the second consecutive month. The industry is likely to witness good inflows in the coming months, says Icra, provided the interest rates soften over the year and global crude oil prices continue to remain at lower levels.

Strong macroeconomic fundamentals of the Indian economy coupled with the possibility of an interest rate cut by the RBI if inflation remains under control, are some of the key factors that are expected to aid market sentiments moving forward. Theme-based funds, particularly relating to infrastructure, healthcare and IT, have been gaining steady traction and the trend is likely to sustain moving forward backed by the government’s increased thrust on these sectors. The only concern being that tighter liquidity conditions probably led to higher outflows from the short term debt funds such as the Liquid Funds. With the expectations of high economic growth and political continuity, says a statement by Union AMC, investors appear to be becoming increasingly confident about the prospects of the

Indian equity market. There is no denying that the Mutual Fund industry’s AUM is well on track to achieve the targeted goal of Rs. 100 lakh crore in the next few years.