One-year ascent: Mutual funds go from Rs 40 trillion to Rs 53 trillion

Mark-to-market gains vs inflows: It's a 70-30

The journey of mutual funds (MFs) from Rs 40 trillion to nearly Rs 53 trillion in the past year is mostly driven by mark-to-market gains in the equity segment and appreciation in the value of debt and gold assets.
 

Analysis of data from the Association of Mutual Funds in India shows that asset growth was largely driven by the appreciation in the prices of the underlying assets. The assets under management have grown by Rs 13 trillion during the February 2023–January 2024 period to Rs 52.7 trillion. The net inflows in this period came in at Rs 3.86 trillion.
 

The equities market has rallied sharply since 2023. The benchmark indices National Stock Exchange Nifty50 and S&P BSE Sensex had registered close to 20 per cent gains in the calendar year 2023 (CY23). The gains were nearly double in the midcap and smallcap indices.
 

While the flows into equity schemes have been better compared to previous years, debt fund flows took a hit after March 2023 due to a change in taxation. Equity schemes raked in Rs 1.62 trillion in inflows in CY23. In comparison, active debt funds registered an outflow of Rs 46,000 crore.

 

Inflows into MFs have picked up after the pandemic, but the aggregate flow is still only 6.1 per cent of the total household savings, according to data from the Reserve Bank of India.
 

In 2022–23, Rs 1.8 trillion in household savings went into MFs. Banks received Rs 10.3 trillion. Life insurance and small savings schemes were also ahead of MFs, with inflows of Rs 5.3 trillion and Rs 8.6 trillion, respectively.