In a noteworthy development, the assets under management (AUM) of India’s mutual fund industry reached an unprecedented Rs 50.80 trillion in December, marking a substantial increase from the Rs 48.78 trillion recorded in November 2023. This achievement is attributed to the consistent inflows and a robust rally in the Indian equity markets, as revealed by data released by the Association of Mutual Funds of India (AMFI), the industry’s primary trade body.
Equity mutual funds demonstrated a noteworthy 9 percent rise in net inflows, reaching Rs 16,997 crore in December. The growth in total AUM aligns with the impressive performance of the BSE Sensex, which rose by 7.53 percent, and the NSE Nifty, which gained 7.93 percent during the same period.
Systematic investment plans (SIPs) also experienced an uptick, with inflows reaching Rs 17,610 crore in December, compared to Rs 17,073 crore in the previous month. This surge underscores the confidence of retail investors in navigating market volatility through SIPs.
Manish Mehta, Head of Sales, Marketing & Digital Business at Kotak Mutual Fund, commented on the sustained strength of SIPs, highlighting that investors continue to favor this approach for market exposure.
In the equity landscape, smallcap funds garnered net investments of Rs 3,858 crore, while midcap fund inflows experienced a 48 percent decline in December. On the other hand, largecap funds witnessed net outflows of Rs 281 crore.
In the fixed-income segment, debt funds saw substantial net outflows of Rs 75,560 crore in December. Liquid funds led this trend with net outflows of Rs 39,675 crore, followed by low-duration funds at Rs 9,432 crore and money market funds at Rs 8,384 crore. Ultra-short duration and floater funds also recorded net outflows of Rs 6,000 crore each, with overnight funds experiencing outflows of Rs 4,865 crore.
Gopal Kavalireddi, Vice President of Research at FYERS, explained that the decline in total inflows into the mutual fund industry by Rs 40,685 crore was influenced by quarter-ending advance tax payments, regular redemptions from debt funds, and higher valuations in the equity space.
Hybrid schemes garnered attention, with net flows of Rs 15.009 crore, primarily driven by an inflow of Rs 10,645 crore into arbitrage funds. Investors are strategically reallocating their funds between equity and debt amid record-high levels in the Indian markets.
For the calendar year, the net flows for equity funds stood at Rs 1.61 trillion. Mid and small-cap mutual funds received 39 percent of these inflows, while sectoral or thematic funds garnered Rs 30,841 crore. Largecap and focused funds were the only two sectors with negative inflows, each experiencing around a 1.7 percent decline.
