Total inflows into the mutual fund industry grew by 135.38% at Rs 60,295.30 crore in November 2024, as against Rs 25,615.65 crore in November 2023. Interestingly, the net AUM which was at Rs 49.05 lakh crore in November last year, crossed the historic milestone to touch Rs 68.08 lakh crore in November 2024.
With 2024 on the close and 2025 on the horizon, markets are witnessing intermittent bouts of volatility. Sluggish growth, rising tendencies of protectionism and geopolitical uncertainty are some of the factors which have weighed on the markets and contributed to market jitters, said the report.
However, amidst the headwinds, the domestic mutual fund industry has showcased resilience backed by a sense of optimism regarding the growth prospects of the Indian economy, strong participation from retail investors, broadening investor base and growing interest and awareness among investors from smaller cities regarding mutual funds, the report highlighted.
“Markets may witness some short-term volatility in the near term due to higher valuations, tensions in the Middle East and volatility in global crude oil prices. However, market corrections may be seen as opportunities to invest as it is essential to focus on long term sustainable growth. With the structural growth story of the Indian economy remaining intact and India a bright spot in the global economy, the domestic mutual fund industry is expected to witness multi-fold growth in the coming years,” said Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics.
The share of open-ended equity oriented mutual funds to the total AUM increased to 44.59% at Rs 30.36 lakh crore in November 2024 up from 41.46% in November last year indicating the growing confidence among retail investors in the mutual fund ecosystem. Total inflows into equity mutual funds increased by 131.35% at Rs 35,943.49 crore in November 2024, as against Rs 15,536.42 crore last year. Since the beginning of calendar year 2024, inflows into equity mutual funds were up by 65.03% from Rs 21,780.56 crore in January 2024.
The number of new SIPs registered increased to 49.47 lakh at the end of November 2024, as against 30.80 lakh in November 2023. The SIP AUM stood at Rs 13.54 lakh crore in November 2024, as against Rs. 9.31 lakh crore in 2023. Overall net inflows stood at Rs 9.14 lakh crore from January 2024 to November 2024, as against Rs. 2.74 lakh crore in 2023, which tantamount to a growth of 233%.
While all funds witnessed robust growth, inflows into large cap funds under equity category were the highest, registering a surge of nearly 731% at Rs 2547.92 crore in November 2024 as against Rs 306.70 crore in the same period last year.
Inflows into sectoral/thematic funds grew by 289.77% at Rs 7657.75 crore; flexi cap by 204.88% at Rs 5084.11 crore; large and mid-cap by 153.31% at Rs 4679.74 crore and value/contra fund by 66.79% at Rs 2088.01 crore. In terms of AUM, sectoral/thematic funds witnessed the maximum growth of 94.78% at Rs 4.62 lakh crore; large and mid-cap by 54.25% at Rs 2.68 lakh crore; flexi cap by 42.13% at Rs 4.35 lakh crore and small cap by 48.24%t at Rs 3.26 lakh crore.
Inflows into Growth/Equity oriented schemes
Source: AMFI & MFI360 Explorer
“Domestic equity markets witnessed volatility in the past two months primarily because the corporate earning numbers for the quarter ended Sep 2024 came in lower than expected. Increase in domestic inflationary pressures and the outcome of the U.S. Presidential elections dampened hopes of rate cuts by the U.S. Federal Reserve. Moreover, growing uncertainty regarding global policies, geo-political issues and higher valuations have led to volatility in the markets. Large and mid-cap funds are likely to be a big draw among investors in the coming days amid increased volatility in domestic markets following escalating geopolitical risks and global uncertainty,” Kumar said.
Small cap and mid cap funds, which have witnessed a steady surge in AUM, are also likely to hold investor interest in the medium to long term, due to the value created in the entities backed by robust regulatory framework leading to better corporate governance practices and the government’s firm intent to push for an intrinsic growth in the country’s economy.
There has also been a heightened activity in theme-based funds, particularly those relating to infrastructure, healthcare and IT. “Investors, particularly in the retail segment, are seeking new growth opportunities and are exploring avenues to generate alpha or higher returns. This explains the heightened activity in sectoral/thematic funds in the last few years. However, such funds are suitable for those investors who understand the dynamics of specific sectors or themes and can accordingly evaluate their growth prospects and risk-taking ability effectively. It is imperative that investors stay updated about the latest market trends and economic developments and take well-informed investment decisions,” Kumar pointed out.
Moving forward, market participants will continue to remain optimistic regarding the growth prospects of the Indian economy which can be attributed to strong corporate balance sheets and government support. The Indian economy is expected to grow at a steady pace led by corporate capex and pick up in bank credit. However, increase in domestic inflationary pressures, uneven and below average monsoons, volatility in global crude oil prices, tensions in the Middle East, geopolitical tensions between Russia and Ukraine, protectionist measures from the new U.S. Administration and heightened valuations might impact the industry moving forward, he added.
