Mutual fund redemptions dip to 6-month low in Oct, equity AUM up 24.5% YTD

Equity AUM for domestic MFs (including ELSS and index funds) decreased 1.4% MoM to Rs 20.7 trillion Oct'23, led by a fall in market indices (Nifty down 2.8% MoM).

After achieving the milestone of 20,000 in September 2023, Nifty50 consolidated in October after global and local markets were jolted by the Israel-Palestine conflict. The index oscillated 1,012 points before closing 559 points (or 2.8% MoM) lower at 19,080, notably the steepest month-on-month decline in calendar year 2023, noted brokerage Motilal Oswal in a note. 

While foreign institutional investor ( FII) outflows have been sharp in the last two months, they were offset by stronger domestic institutional investor ( DII) inflows. In October 2023, DIIs recorded the highest inflows in the last seven months at $3.4 billion. FIIs saw outflows for the second consecutive month at $2.7 billion. 

Equity assets under management ( AUM) for domestic mutual funds ( MFs) (including ELSS and index funds) decreased 1.4 per cent month-on-month to Rs 20.7 trillion in October 2023, led by a decline in the market indices.

Notably, the month saw an increase in sales of equity schemes (up 4.3 per cent) The pace of redemptions slowed down 14.8 per cent to Rs 260 billion. This is a six-month low. 

Consequently, net inflows accelerated to Rs 220 billion in Oct’23 from  Rs 155 billion in Sep’23, noted Motilal Oswal.

Meanwhile, total assets under management for the MF industry rose 0.3% month-on-month to Rs 46.7 trillion in Oct’23, led by a monthly increase in AUM for liquid (Rs 425 billion), income (Rs 38 billion), arbitrage (Rs 29 billion),

gold ETFs (Rs 24 billion), and Gilt (Rs 23 billion) funds but offset by a MoM decline in AUM for equities (Rs 286 billion), other ETFs (Rs 79 billion), and balanced funds (Rs 29 billion), noted the brokerage.

Total equity value for the top 20 AMCs declined 1.8% MoM (+20.2% YoY) in Oct’23 vs. a 2.8% MoM fall (+5.9% YoY) for the Nifty-50.

 Among the Top 10 funds, the maximum MoM decline was seen in Aditya Birla Sun Life Mutual Fund (-4.5%) followed by Axis Mutual Fund (-3.5%), SBI Mutual Fund (-2.5%), DSP Mutual Fund (-2.5%), and Mirae Asset Mutual Fund (-2.5%).

Trends in Top 20 MFs by equity value

Note: Equity value represents the equity exposure of all MF schemes (including balanced and other schemes)

Cash is derived by deducting equity AUM (Including foreign equity) from total AUM; only equity growth schemes have been considered for cash

HSBC MF equity value for the previous month and year includes L&T MF value for comparability