Mutual funds: The Indian mutual fund industry, which has witnessed over five-fold growth in Assets under Management (AUM) in the last ten years, may surpass the Rs 100 lakh crore AUM mark in the next two to three years, a report by ICRA Analytics said. The MF industry’s AUM crossed the Rs 50 lakh crore mark for the first time in December 2023, and is at Rs 60 lakh crore in a span of just six months and stood at Rs 61.16 lakh crore in June 2024. The net AUM experienced a substantial increase of almost 38% (37.77%) to reach Rs 61.16 lakh crore by June 2024, compared to Rs 44.39 lakh crore in June 2023. Furthermore, on a month-on-month basis, the net AUM rose by approximately 4% (3.81%) from Rs 58.91 lakh crore recorded in May 2024. Notably, the industry's AUM has demonstrated remarkable growth, soaring by 527% over the last decade, climbing from Rs 9.75 lakh crore in June 2014 to Rs 61.16 lakh crore in June 2024. Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics, said the resilience of the Indian financial market and improved growth prospects of the Indian economy is boosting investor confidence leading to increased participation of retail investors. This is auguring well for the mutual fund industry, which has been witnessing a robust growth in inflows and a surge in contribution through the SIP route. “India is in a bright spot in the global economy. Reformatory measures adopted by the Indian government and strong macroeconomic fundamentals bores well for the Indian economy and the Indian mutual fund industry. Market regulator SEBI has adopted a slew of measures which has improved the transparency and accountability of the mutual fund industry. This, in turn, has helped boost investor confidence leading to increased participation,” Kumar said. This growth was driven by increases in AUM for: > Equity funds > Other ETFs (Exchange Traded Funds) - AUM increased by Rs 473 billion MoM. > Balanced funds - AUM increased by Rs 280 billion The sum total SIP contributions for the first half of 2024 surpassed Rs. 1 lakh crore level and stood at Rs. 1.20 lakh crore. Monthly SIP contribution continued to remain above Rs 20,000 crore for the third consecutive month as it rose to a new high of Rs. 21,262 crore in June 2024. SIP contributions increased by nearly 44 per cent on a year-on-year basis. Equity mutual funds witnessed a whopping 370 per cent rise in inflows at Rs 40,608.19 crore in June 2024, as against Rs 8637.49 crore in June 2023. Nearly 55 per cent of the inflows came from sectoralthematic funds, which saw inflows to the tune of Rs 22,352 crore in June 2024. This is a sharp surge as compared to inflows of around Rs 459 crore in June 2023. Sectoralthematic funds come with a bias as they are inclined towards a theme or sector. In case the concerned sectortheme experiences some headwinds, then the entire fund may start to underperform as they have high exposure to a particular sector. This is in stark contrast to a diversified fund as it has exposure to multiple sectors and is well insulated from such sectoral shocks even though not completely immune to it. As per reports, rise in market indices is due to the Nifty index. It showed a substantial 6.6% increase MoM. Sales of equity schemes experienced a significant 15% MoM rise, amounting to Rs 905 billion. This surge in sales could be linked to mutual fund houses launching more New Fund Offers (NFOs) compared to the previous month.
