Retail investors' share in MF AUM goes past 60% for the first time in Dec

Retail investors’ share in total assets under management (AUM) of mutual funds went past 60 per cent for the first time in December 2023 on the back of a rally in the stock market and strong retail flows into equity schemes. The retail pie in the MF AUM has been inching upwards for some years now, with the pace picking up after the Covid-19 pandemic. Retail investors and institutions had a 50-50 share in the MF AUM as of June 2020.

 The growing retail dominance is also a result of outflows from debt schemes amid low returns after the rate cut cycle (2021-2022) and change in taxation. Debt funds derive the bulk of their flows from institutions. Investors pulled out a net Rs 3 trillion in the past three calendar years (2021-2023), according to data from the Association of Mutual Funds in India (Amfi).

 As a result, the share of equity schemes has been going up consistently. In 2023 itself, it surged from 51.6 per cent to 56.5 per cent. The AUM of active equity schemes jumped 43 per cent in 2023 to Rs 21.8 trillion in 2023. At the same time, the debt fund AUM rose 4 per cent to Rs 12.9 trillion.

 The surge in equity AUM was a result of both consistent flows and market rally. The benchmark Sensex and the Nifty50 ended the year with gains of 18.7 per cent and 20 per cent. The midcap and smallcap indices registered over 40 per cent gains.