Mutual fund industry records Rs 22.86 lakh crore AUM; retail investors appetite rises

The performance of mutual fund industry in India has been growing consistently, and looking at the latest data, it has once again recorded heavy inflows especially from retail investors. This does show an appetite of retail investors for mutual fund markets. According to the Association of Mutual Funds in India (AMFI), Assets Under Management (AUM) of the Indian mutual fund industry grew 1.19% sequentially to Rs. 22.86 lakh crore in June 2018 from Rs. 22.60 lakh crore in May 2018, supported largely by inflows in Liquid schemes. On yearly basis, the industry AUM witnessed growth of 20.57%. 

In the first quarter of FY19,  average Assets Under Management (QAAUM) was Rs. 23.40 lakh crore, up 19.91% from Rs. 19.52 lakh crore at the end of Q1FY18, driven by strong retail investor participation through Systematic Investment Plans (SIPs) and robust inflows from B30 cities.

AUM under Equity (including Equity Linked Savings Schemes or ELSS), Balanced, and other ETFs for June 2018 came in at Rs. 9.94 lakh crore, down 0.67% MoM but up 32.63% YoY. AUM for Arbitrage Funds came in at Rs. 0.56 lakh crore in June 2018, down 2.29% from Rs. 0.57 lakh crore in May 2018.

According to ICRA, industry witnessed total net inflow of Rs. 46,475 crore in June 2018 as against net outflow of Rs. 50,000 crore in May 2018. The main reason behind the change in trend is Liquid/Money Market category registering an inflow of Rs. 52,104 crore in June 2018 as against an outflow of Rs. 46,724 crore in May 2018.

Equity funds (including ELSS) in the June month, saw net inflow of Rs. 9,660 crore, down 14.89% MoM, but up 18.32% YoY. The pace of growth has declined mostly because of volatility in equity markets as oil prices rise and global trade war concerns intensify.

In ICRA's view, income category witnessed outflow of Rs. 23,119 crore in June 2018 as against outflow of Rs. 20,407 crore in May 2018 amid rising bond yields. Inflows in Balanced category came in at Rs 1,482 crore, down 44.41% MoM, the reason could be declining stock markets and 10% dividend distribution tax that was imposed from April 2018.

The rating agency added, retail investors’ contribution has grown on the back of investor education initiatives by Asset Management Companies (AMCs) and a vigilant regulator. Investment by retail investors led to more than 55% YoY growth in SIP inflows in May 2018.

Data given by market regulator Sebi revealed that,  the total folio count at the end of June 2018 stood at 7.46 crore, up 1.57% MoM and 21.97% YoY. The mutual fund industry added approximately 11.70 lakh new folios in June 2018 out of which 8.03 lakh were in the Equity category (including ELSS). Balance, Liquid category and Other ETFs added 1.25 lakh, 1.40 lakh and 1.17 folios, respectively. However, folio count declined in Income and Gold ETF categories.

Furthermore, ICRA also highlighted that, country’s smaller towns or B30 (beyond top 30 cities) accounted for 14.08% of the total industry AUM at the end of June 2018. In June 2018, the share of direct plans in B30 stood at 16.74% and in T30 (top 30 cities) at 44.60%. Non-associate distributors and Direct plans contributed 51.18% and 40.68% to the total AUM in the month.