Mutual funds (MFs) managed Rs 66.2 trillion worth of assets in the July-September quarter, registering a 12.3 per cent growth over the previous three-month period. This is the highest quarterly rise in MF assets in at least the last five years.
In the April-June period, the average quarterly assets under management (AUM) stood at Rs 59 trillion.
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According to experts, the sharp rise in AUM is underpinned by the rally in equity markets and record inflows into equity schemes.
The key benchmark indices Nifty 50 and Sensex had logged around 7 per cent gains in the quarter ending September 2024 (Q2). Amid the rally, investors poured in over Rs 75,000 crore in July and August into active equity schemes. The inflows were supported by new fund launches.
“The mark-to-market gains in MFs’ equity holdings have been the key factor. The growing inflows through the systematic investment plan (SIP) route also added to the AUM growth. For a change, the inflows into debt funds were also better in the previous quarter as the rate cut hopes boosted investor interest,” said DP Singh, deputy managing director & joint chief executive officer, SBI Mutual Fund.
“AUM growth is mostly a function of the equity market performance. The last quarter was stellar in that aspect with key indices ending all the three months with gains. This led to strong mark-to-market gains in equity and hybrid schemes. In addition, the inflows into equity schemes were also robust,” said Anand Varadarajan, head – institutional clients, banking, alternate investments, and product strategy, Tata Asset Management Company (AMC).
The SIP inflows have continued to scale new highs. In August, they stood at Rs 23,547 crore against Rs 23,332 crore in July. The SIP inflows mostly go into equity schemes.
Debt funds recorded net inflows of Rs 1.6 trillion during the July-August period, shows data from the Association of Mutual Funds in India (Amfi).
The larger fund houses were the biggest contributors to the AUM growth, thanks to the base effect. The largest fund house, SBI MF, managed assets worth Rs 11 trillion in Q2, Rs 1.1 trillion more than the average AUM in Q1. ICICI Prudential MF’s average AUM went up Rs 90,000 crore to Rs 8.4 trillion. The third-largest fund house, HDFC MF, saw assets grow by a similar quantum to Rs 5.5 trillion. In percentage terms, Nippon India MF grew the fastest among the top five as its average AUM went up 13.5 per cent.
The strong and consistent inflows have allowed MFs to emerge as a key support for the market. MFs’ deployment in the equity market has seen a sharp increase in the past few years. The investments in the first six months of FY25 are already at par with the total deployment in FY24 at Rs 2 trillion. For the calendar year (CY) 2024 so far, the net equity buying is at a record Rs 2.8 trillion.
MFs have been net buyers for 17 consecutive months. The deployment has been over Rs 10,000 crore a month for the past 14 months.
First Published: Oct 07 2024 | 7:04 PM IST
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