Indian MF sector midway to Rs 100 lakh-cr AUM

Value Pick

♦ AUM grow 19% from Rs39.33 lakh cr in Aug 2022

♦ G20 success enhanced investor sentiment

♦ Equity inflows hit a 5-mth high of Rs20,245 cr in Aug

♦ Inflows from retail investors on the rise

Chennai: With assets under management (AUM) of Rs46.63 lakh crore at the end of last month, the Indian mutual fund industry is nearly half way through its goal of touching Rs100 lakh crore of assets under management (AUM) over the next few years, said credit rating agency ICRA.

According to ICRA, the AUM of the Indian mutual fund industry grew by nearly 19 per cent to touch Rs46.63 lakh crore as on August 31, up from Rs39.33 lakh crore as on August 31, 2022.

“At the current levels, the industry is nearly half way through its targeted aim of achieving an AUM of Rs100 lakh crore over the next few years. The growth in AUM is supported by a sense of optimism among investors against the backdrop of the G20 summit successfully hosted by India, the country’s strong growth prospects moving forward and positive global cues,” ICRA said.

Incidentally, benchmark Nifty-50 hit the psychological 20,000 mark for the first time on Monday on the back of upbeat domestic macroeconomic data and positive global cues.

Net inflows into equity-oriented schemes hit a five-month high of Rs20,245 crore in August, up from Rs7,626 crore in July this year, according to data released by the Association of Mutual Funds in India (AMFI).

Equity saw inflows on the back of some marginal dip in Nifty in the month of August, which also acted as a consolidating point and a good value pick opportunity. Moreover, the trend of higher inflows from individual investors has been on the rise.

Lastly, the comparative advantage position that India enjoys post-China slowdown, and Russia being sidelined, led to higher inflows. India’s growth prospect remains strong, ICRA said.

Among the growth/equity-oriented schemes, the small and mid-cap funds witnessed inflows to the tune of Rs 4,265 crore and Rs 2,512 crore respectively; sectoral/thematic funds saw net inflows of Rs 4,806 crore while value/contra fund saw inflows of Rs 1,365 crore.

However, large-cap space, focused and ELSS funds recorded net outflows of Rs349 crore, Rs 471 crore and Rs 27 crore respectively.

Debt mutual funds witnessed net outflows of Rs25,873 crore in August as against net inflows of Rs61,440 crore in July this year with nine out of 16 fund categories witnessing outflows during the month. With festive season nearing, the fear of inflation rising has led to outflows apart from the uncertainty on interest rates and Reserve Bank of India’s stance to maintain an Arjuna-like focus on inflation.

“The Indian equity markets has been witnessing a rally backed by upbeat domestic macroeconomic data, a sense of optimism around India’s growth prospects and positive global cues. This rally in equity markets might have prompted investors to look at equity-oriented schemes. Moreover, we feel investors are adopting a wait and watch approach due to the current uncertainty over the direction of interest rates in the country. This could have led to the higher outflows from debt schemes,” Ashwini Kumar, Head Market Data, ICRA Analytics said.

“However, in the medium to long term, we expect markets to continue to grow on the back of a good growth in the domestic economy,” he added.