Equity mutual funds log Rs 34,419 crore net inflows in September

Inflows into equity schemes positive for 43rd; MF industry AUM tops Rs 68 trn

The domestic mutual fund (MF) industry continued to attract big-ticket investments from individual investors seeking to tap into the surging equity markets. In September, actively-managed equity schemes — which have almost a dozen sub-categories — raked in Rs 34,419 crore in net inflows.

While the tally was 10 per cent lower than the preceding month, it was still comfortably above the past 12-month average of Rs 25,600 crore.

Thematic funds have consolidated their position as the largest equity mutual fund category with assets under management (AUM) of Rs 4.7 trillion, driven by robust inflows of Rs 13,255 crore—the highest among all equity sub-categories.

Overall, the average AUM for the MF industry rose to Rs 68 trillion in September, up from Rs 66 trillion in the preceding month.

The growth was driven by a 4 per cent surge in the benchmark Nifty 50 index rose, even as the Nifty Midcap 100 and the Nifty Smallcap 100 indices ended the month with little change.

The retail AUM also topped Rs 40 trillion for the first time, indicating the growing attractiveness of MFs. Retail share in overall MF AUM is at 60 per cent, up from 44 per cent about a decade ago.

Retail AUM has doubled from Rs 20 trillion in August 2022.

Since then the Nifty surged 43 per cent since then underpinned by strong domestic inflows. Over the past 12 months, the benchmark equity gauge has risen 27 per cent led by buying to the tune of Rs 3.4 trillion by equity MFs. 

This investment has come on the back of Rs 3.3 trillion net inflows into equity schemes. Inflows into equity schemes have remained positive now for a 43rd straight month.

A large portion of these flows have come via the systematic investment plan (SIP) route—where investors commit a fixed sum every month.

In September, the contribution through the route hit a fresh record of Rs 24,509 crore, while SIP AUM also rose to a record Rs 13.82 trillion, as per industry body Amfi. The number of new SIPs registered last month were at 6.64 million, taking the total count to 98.7 million, it said.

The contribution of debt schemes to overall AUM continued to shrink on the back of a combined Rs 1.14 trillion outflows from the 16 sub-categories. The average AUM of open-ended debt-oriented schemes dropped to Rs 16.1 trillion from Rs 16.22 trillion in August. The debt AUM is now less than 24 per cent of the industry AUM.

Foreign brokerage Nomura stated in a note on Tuesday that India's mutual fund industry has significant growth potential, notwithstanding the recent surge.

“The key themes providing a long runway to grow for the AMC industry are significant under penetration relative to other countries, increasing retail participation, continued strong momentum in SIP flows, and increasing share of mutual funds as a percentage of gross household savings,” it said while projecting the equity AUM to grow 20 per cent annually over the next five years.