Market correction halts MF asset gains; average AUM dips 1.7% in Q4

Average quarterly AUM fell 1.7 per cent in Q4

The sharp correction in the equity market that started in September 2024 halted a 10-quarter streak of asset growth for mutual funds (MFs) in the January-March quarter (Q4) of 2024-25 (FY25). 

Assets under management (AUM) of MFs fell from ₹68.6 trillion in the previous quarter to ₹67.4 trillion in Q4FY25, a decline of 1.7 per cent. 

MF assets fluctuate on the basis of two key factors: net inflows and outflows and the mark-to-market impact of market movements on underlying assets. 

With 54 per cent of MF AUM invested in domestic equity-oriented schemes (active and passive) as of February, equity market performance significantly influenced total AUM. 

Solution-oriented and hybrid schemes that allocated a portion of their portfolios to equities have amplified this effect.

The benchmark Nifty 50, which declined 0.6 per cent and 5.9 per cent in the first two months of Q4 respectively, however, recovered much of the losses in March to end the quarter 0.5 per cent lower.  

The average value of Nifty 50 was 23,110 in Q4, down 5.1 per cent from Q3. 

 

The mark-to-market impact of MF AUM was cushioned to an extent by fresh investments. Investors poured in a net ₹2.3 trillion into MF schemes in the first two months of Q4. 

While inflow data for March is yet to be released, MFs’ equity-buying data indicates a decline in net equity fund investments for the third consecutive month. 

MFs deployed a net ₹12,622 crore in the equity market during the month compared to a net buying of ₹48,000 crore in February and ₹57,650 crore in January, according to Securities and Exchange Board of India data. 

Net investments in active equity schemes stood at ₹29,303 crore in February and ₹39,687 crore in January. In comparison, the December inflow was ₹41,156 crore. 

At the fund house level, SBI, ICICI Prudential and HDFC remained the top three fund houses in terms of AUM.  

SBI reported a quarterly average AUM of ₹10.7 trillion in Q4, down 3.7 per cent from the previous quarter. ICICI Prudential’s quarterly average AUM grew 0.6 per cent to ₹8.8 trillion, while that of HDFC declined 1.7 per cent to ₹7.7 trillion.