Equity AUM rises for 10th consecutive year to Rs 23.8 trillion, up 43% YoY

The equity assets under management ( AUM) of domestic mutual funds rose for the tenth consecutive year to touch Rs 23.8 trillion in the calendar year 2023, up 43 per cent on year, shows data analysed by brokerage Motilal Oswal. 

The rise in AUM was fueled by an uptrend in market indices and higher equity scheme sales which touched Rs 386 billion, up 13 per cent on year. 

India ended 2023 on a high note, with the Nifty delivering 20 per cent returns, marking the eighth consecutive year of a positive return. The expectations of the peaking of the rate hike cycle, moderating inflation, improving liquidity, and consistently rising retail participation in equities, along with strong corporate earnings, drove this performance. 

 

Even FII flows rebounded while the domestic flows remained resilient with $22 billion of inflows amid the hectic primary and secondary market activities.

However, mutual fund redemptions also increased 39 per cent year-on-year to Rs 3,323 billion, leading to a decline in net inflows to Rs 2,063 billion in CY23 from Rs 2,383 billion in calendar year 2022, noted the brokerage. 

The MF industry’s total AUM increased 27 per cent YoY from Rs 10.9 trillion in calendar year 2022 to Rs 50.8 trillion in CY23, propelled by the growth in equity funds, other ETFs, balanced funds, and arbitrage funds, said Motilal Oswal. 

Investors continued to park their money in mutual funds, with inflows and contributions in systematic investment plans (SIPs) reaching a new high of Rs 176.1 billion in December 2023 (up 3.1% month on month and 29.7% YoY).

The year saw a notable change in the sector and stock allocation of funds. The weight of defensives improved 120bp to 29.6 per cent, propelled by an increase in the weights of Utilities, Healthcare, and Telecom; while Technology, and Consumer moderated.

Defensives attract attention in CY23; the BFSI pack contracts

Domestic cyclicals’ weight declined 110bp in CY23...pulled down by BFSI, Chemicals, Textiles, and Retail

1. The weight of Domestic Cyclicals declined 110bp to 62.1%, pulled down by BFSI, and Chemicals.
2. Global Cyclicals’ weightage, too, decreased 20bp to 8.2%, led by Oil & Gas.
3. Capital Goods improved its position to fourth from eighth a year ago, with the weight increasing 130bp to 7.5% in CY23.
4. The BFSI pack, however, saw a massive 360bp contraction in weight to 29%.
5. Technology’ position remained unchanged over the last one year, with the weightage moderating 30bp to 9.4%.
6. Healthcare saw a rise in weight to 6.9% (+60bp YoY) in CY23.
7. Utilities witnessed a surge in weight to 4.3% (+110bp YoY).