Rs 20 trillion & rising: AUM of active equity mutual funds surges

The industry's overall AUM rose 5 per cent to Rs 49 trillion, largely owing to the value appreciation of equity holdings

Active equity schemes in November saw their assets under management (AUM) surpass the Rs 20-trillion mark for the first time, bolstered by a buoyant market sentiment. The 8 per cent, or Rs 1.5 trillion, jump in AUM last month mirrored the growth observed in the Nifty 500 index.

There has been a 34 per cent (Rs 5.2 trillion) surge in the assets of active equity schemes since March-end, showed data from the Association of Mutual Funds in India (Amfi).

This sharp uptick in AUM has been fuelled by a rally in the equity markets after March and a subsequent surge in inflows. In FY24 (until November 30), the key benchmark indices — Nifty50 and Sensex — registered gains of 15.7 per cent and 13.4 per cent, respectively. During this period, mutual funds netted Rs 95,800 crore into active equity schemes, a significant increase from the Rs 90,680 crore netted during the same period of FY23.
 

Despite a 22 per cent dip from October’s collection, November’s net inflows into active equity schemes, at Rs 15,536 crore, exceeded the average flows observed in FY24.

The month-on-month decline could be attributed largely to lower gross collections, which declined 11 per cent to Rs 38,885 crore. Outflows remained relatively stable at Rs 23,350 crore.

 “Diwali festivities and bank holidays probably affected equity net flows in November. Flows continue in multi-asset allocation category schemes where timing is left to the underlying schemes. SIPs continue to attract new investors,” said Manish Mehta, head-sales, marketing & digital business, Kotak Mutual Fund.

Systematic investment plans (SIPs) continued to reach new heights as investors funnelled Rs 17,073 crore through this channel in November, slightly more than the Rs 16,928 crore brought in by SIPs in October. Over 3 million new SIP accounts were registered during this period.

 The MF industry’s overall AUM rose 5 per cent to Rs 49 trillion, largely due to the value appreciation of equity holdings.

“The AUM has been increasing steadily, reflecting the growing trust and confidence of investors. The overall AUM stands at Rs 49,04,992 crore in November 2023. We believe this trend will continue through December as well,” said N S Venkatesh, chief executive officer, Amfi.

However, debt funds were a drag as investors withdrew Rs 4,700 crore, with corporate bond funds and ultra-short duration funds witnessing the highest outflows. Anand Vardarajan of Tata AMC noted: “Though yields are looking very attractive, tight liquidity is possibly putting pressure on net inflows.”

In terms of equity schemes, midcap and smallcap funds continued to attract the majority of inflows. These two fund categories collectively received a net of Rs 6,360 crore, accounting for 40 per cent of total inflows into equity funds.

Analysts expect largecap funds, which have recently returned to registering net inflows after several months of outflows, to gain better traction in the coming months.

 “With (the Lok Sabha) elections around the corner and expectation of better FII flows into the Indian stock markets, equities may continue to rally, with minor corrections from time to time. Largecaps, on the back of relatively affordable valuations, may find investor interest, while pockets of mid and smallcaps continue their outperformance,” said Gopal Kavalireddi, vice-president of research at FYERS.