 "Equity inflows decline 14% but MF AUM climbs to Rs 68 lakh cr in November")
68 Lakh Crore AUM in November 2024
The Indian mutual fund industry has hit a new milestone in November 2024 with the net assets under management (AUM) reaching Rs 68 lakh crore, , a notable increase from Rs 67,25,614.61 crore in October 2024. This growth comes despite a challenging global economic environment, marked by weak global cues, China’s recent economic stimulus, and ongoing geopolitical tensions between Ukraine and Russia, which led to continued selling by foreign portfolio investors (FPIs).
The month of November saw a 14.19% drop in equity inflows, amounting to Rs 35,943.49 crore compared to Rs 41,886.69 crore in October. However, on a year-on-year basis, equity inflows saw a remarkable rise of 131.35%, up from Rs 15,536.42 crore in November 2023, highlighting sustained retail interest in equity mutual funds despite market volatility.
Key highlights from the mutual fund industry’s performance in November 2024 include:
- Net AUM: Rs 68,08,101.16 crore (Nov 2024) vs Rs 67,25,614.61 crore (Oct 2024)
- AAUM: Rs 68,04,913.46 crore (Nov 2024) vs Rs 68,50,321.44 crore (Oct 2024)
- Mutual Fund Folios: Reached an all-time high of 22,08,14,387 in Nov 2024
- Retail MF Folios (Equity + Hybrid + Solution Oriented Schemes): 17,54,84,468 in Nov 2024, up from 17,23,52,296 in Sept 2024
- Retail AUM (Equity + Hybrid + Solution Oriented Schemes): Rs 39,70,220 crore (Nov 2024) vs Rs 39,18,611 crore (Oct 2024).
- New Scheme Launches: 18 new open-ended schemes launched in Nov 2024, raising Rs 4,052 crore.
- SIP Registrations: 49,46,408 new SIPs in Nov 2024, down from 63,69,919 in Oct 2024
- SIP AUM: Rs 13,54,104.70 crore in Nov 2024
- SIP Contribution: Rs 25,319.66 crore in Nov 2024, slightly down from Rs 25,322.74 crore in Oct 2024
- SIP Accounts: Reached an all-time high of 10,22,66,590 in Nov 2024, compared to 10,12,34,212 in Sept 2024
Despite the volatility in the equity markets, the mutual fund sector demonstrated strong resilience, driven largely by consistent inflows into growth- and equity-oriented schemes. Notably, the SIP (Systematic Investment Plan) continues to be a key driver, with steady inflows over Rs 25,000 crore every month.
SIP contributions have remained resilient, with Rs 25,319.66 crore invested in November 2024, only marginally lower than the previous month's Rs 25,322.74 crore. This consistency demonstrates the importance of SIPs in driving the industry's growth, particularly in terms of long-term wealth creation.
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"Defying a tumultuous month in the equity market, the mutual fund industry's assets reached a new pinnacle of Rs 68.08 lakh crore, driven primarily by robust inflows into growth-/equity-oriented schemes. The unwavering monthly SIP inflows remained above Rs 25,000 crore in November, showcasing the investors' long-term vision and commitment to their financial goals, despite the short-term market fluctuations. The industry's ability to attract consistent SIP flows is a vote of confidence in its ability to deliver value to investors over the long term," said Venkat Chalasani, Chief Executive of AMFI.
Despite the overall decline in equity inflows on a month-on-month basis, small-cap and mid-cap funds saw a positive trend, with inflows up by 9% and 4.3%, respectively. Conversely, large-cap and sectoral and thematic funds witnessed declines of around 26.20% and 37.63%, respectively, on a month-on-month basis.
"“Total inflows into the mutual fund industry dropped by nearly 74.86 per cent on a month-on-month basis at Rs 60,295.30 crore in November 2024, as against Rs 2,39,828.69 crore in October. However, on a year-on-year basis inflows were up by nearly 135.38 per cent from Rs 25,615.65 crore in November 2023. While large-cap funds and sectoral and thematic funds witnessed a drop in inflows by around 26.20 per cent and 37.63 per cent, respectively, on a month-on-month basis, small-cap and mid-cap funds witnessed a growth of around 9 per cent and 4.3 per cent, respectively," said Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics.
Debt funds:
The growth in debt funds net inflows was at the shorter end of the curve as over 90% of the inflows were in the overnight, ultra short duration, low duration and money market funds.
"However, net inflows of debt funds reduced 92% sequentially on account of outflows in the liquid funds and as inflows in October 2024 had been high due to seasonal outflows in September 2024. Despite market volatility, equity net inflows have remained positive for the last 45 months, driven by investor confidence, witnessing Rs 0.36 lakh crore net inflows in November 2024 with all equity categories registering net inflows in the month. However, equity inflows declined 14% sequentially coming off record highs in October 2024," said Sanjay Agarwal, Senior Director, CareEdge Ratings.
During November 2024, 18 open-ended NFOs were floated, which collectively mobilised Rs.0.04 lakh crore with sectoral/thematic funds accounting for 68% share. However, net inflows of the sectoral/thematic funds declined 38% as compared to last month.
Impact of Market Volatility on Equity Inflows
November saw a 17% drop in gross equity inflows, which fell from Rs 74,727 crore in October to Rs 61,697 crore in November. As a result, net equity flows saw a 14% decline, falling from Rs 41,886 crore in October to Rs 35,943 crore in November. Active equity schemes AUM, however, reached Rs 30.35 lakh crore by the end of November, now comprising 44.5% of the total mutual fund industry AUM.
Performance of Various Fund Categories
The volatility also affected specific sectors and categories. Sector and thematic funds saw the largest drop in inflows, with NFO collections falling by 22% in November compared to October. The hybrid funds category saw a 40% reduction in inflows into arbitrage funds, contributing to a drop in overall hybrid fund flows to Rs 4,163 crore in November, down from Rs 16,863 crore in October.
Furthermore, the debt category witnessed significant redemptions in long-duration funds, such as medium duration, long duration, and gilt funds, likely due to market reactions to pressure on Indian long bond yields and profit booking. Consequently, net inflows into debt funds were relatively low at Rs 12,915 crore in November, significantly down from Rs 1.57 lakh crore in October.
"Overall, November saw 18 NFOs collecting Rs 4,052 crores while October saw 29 NFOs collecting Rs 6,078 crores. Of this, new index funds launched in November were 10 vs 17 launched in October. The hybrid funds category saw a 40% reduction in flows into arbitrage funds and therefore the whole hybrid category got Rs 4,163 crores in November against Rs 16,863 crores in October. The debt category saw significant increase in redemptions from long dated debt fund categories like medium duration, long duration and gilt funds. This could be as a reaction to market reaction to pressure on Indian long bond yields and some profit booking. Overall, debt saw a net inflow of only Rs 12,915 crores in November which is less than 10% of the net inflows of Rs 1.57 lakh crores in October," said Mayukh Datta, Chief Business Officer, ITI Mutual Fund.