Rs 25 lakh crore & counting, MF assets hit all-time high

MUMBAI: Indian mutual funds’ assets under management (AUM) reached an all-time high of ₹25.2 lakh crore buoyed by inflows of ₹1.75 lakh crore in the month of August.

Equity markets rallied in August and the Nifty gained 3.9% and investors continued to repose their faith in systematic investment plans (SIPs). Collections through SIPs touched a new-high of ₹7,654 crore, a jump of ₹100 crore over the previous month with many new investors choosing the SIP route.

“Aided by SIPs, retail inflows have been positive for 29 consecutive months and overall numbers of folios have risen for 51 months in a row. This has translated into mutual fund industry AUM crossing ₹25 lakh crore,” said N S Venkatesh, CEO, Association of Mutual Funds of India (AMFI).

The bulk of the inflows in August were in liquid /money market funds with the category gaining ₹1.71 lakh crore, AMFI data showed.

Higher interest rates and a rise in bond yields saw investors move out of high- duration products, such as income funds and gilt funds, with the categories seeing outflows of ₹6,520 and ₹283 crore, respectively.

Equity mutual funds, including ELSS funds, saw an inflow of ₹8,375 crore, and a bulk of it came through SIPs and new fund offers (NFOs).

The industry added 6 lakh SIP accounts in August taking the total number to 2.39 crore, while AUM from SIPs rose to ₹2.32 lakh crore, which is 9.2% of the overall AUM.

“Acceptance of mutual fund as an investment product is increasing rapidly amongst the new generation of investors. Retail investors are showing faith in equities and allocating through SIPs, while HNIs are on the sidelines, allocating money only through systematic transfer plans (STP) as they fear weak macros and upcoming state elections,” said Deepak Chhabria, CEO, Axiom Financial Services.

Higher oil prices, a depreciating rupee, high valuations and uncertainty over growth in corporate earnings are the key worries for the street now.

“Apart from SIP flows, lump sum flows have slowed down substantially from the peak, reflecting the cautious mood in the markets. Many investors are waiting on the sidelines. A drop in oil prices, increase in FII flows or a drop in valuations will act as a catalyst for them to invest,” said Nilesh Shah, managing director, Kotak Mutual Fund.

Mutual fund industry’s AUM had crossed ₹10 lakh crore for the first time in May 2014 and in a span of 40 months, doubled to ₹20 lakh crore in August 2017, moving to ₹25.2 lakh crore over the last one year.