The assets under management (AUM) of the Indian mutual fund (MF) industry grew by nearly 19% to touch Rs 46.63 lakh crore as of 31 August 2023, from Rs39.33 lakh crore in the same period a year ago. The MF industry's average assets under management (AAUM) stood at Rs46.93 lakh crore during August, against Rs39.53 lakh crore in August 2022, according to a report.
In the report, ICRA Ltd says, at the current levels, the MF industry is nearly halfway through its targeted aim of achieving an AUM of Rs100 lakh crore over the next few years.
Incidentally, the benchmark Nifty 50 hit the psychological 20,000 mark for the first time on Monday, based on upbeat domestic macroeconomic data and positive global cues.
According to data released by the Association of Mutual Funds in India (AMFI), net inflows into equity-oriented schemes hit a five-month high of Rs20,245 crore in August, up from Rs7,626 crore in July this year.
ICRA says, "Equity saw inflows on the back of some marginal dip in Nifty in August, which also acted as a consolidating point and a good value pick opportunity. Moreover, the trend of higher inflows from individual investors has been on the rise. Lastly, the comparative advantage position that India enjoys post-China slowdown and Russia being sidelined led to higher inflows. India's growth prospect remains strong."
Among the growth and equity-oriented schemes, the small and mid-cap funds witnessed inflows of Rs4,265 crore and Rs2,512 crore, respectively. Sectoral and thematic funds saw net inflows of Rs4,806 crore, while value or contra funds saw inflows of Rs1,365 crore. However, large-cap, focused and equity-linked savings scheme (ELSS) funds recorded net outflows of Rs349 crore, Rs471 crore and Rs27 crore, respectively.
AMFI data shows that during August, debt mutual funds witnessed net outflows of Rs25,873 crore against net inflows of Rs61,440 crore in July this year, with nine out of 16 fund categories witnessing outflows.
"With festive season nearing, the fear of inflation rising has led to outflows apart from the uncertainty on interest rates and Reserve Bank of India (RBI)'s stance to maintain an Arjuna-like focus on inflation," the rating agency says.
Commenting on the latest data released by AMFI for the month of August, Ashwini Kumar, head for market data at ICRA Analytics, says, "This rally in equity markets might have prompted investors to look at equity-oriented schemes. Moreover, we feel investors are adopting a wait and watch approach due to the current uncertainty over the direction of interest rates in the country. This could have led to the higher outflows from debt schemes."
"However, in the medium to long term, we expect markets to continue to grow on the back of good growth in the domestic economy," he added.
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