Indian Economy News

Retail frenzy boosts MFs; AUM tops Rs 15 lakh crore-mark

Mumbai:  Retail investors are betting big on the equity market and this is evident from the fact that the mutual fund (MF) industry's asset base rose to an all-time high of Rs 15.2 lakh crore at the end of July, helped by strong inflows to income and liquid fund segments.

The industry, comprising 42 active players, had average asset under management (AUM) of over Rs 13.81 lakh crore at the end of June, latest data of the Association of Mutual Funds in India (Amfi) showed.

This comes at a time when stock valuations are trading above their 10-year averages and a correction or some bit of consolidation in the near term cannot be ruled out.

However, fund managers believe with steady domestic flows, mutual funds have huge cash piles which they will be deploy on any correction, thus providing a cushion to the market.

"Market valuations are on the higher side at this point, but if earnings growth comes back, the market should do fine. If global factors lead to any kind of selloff, we could see some correction in the market. But a lot of people are still there on the sidelines, not able to participate in this rally," Mahesh Patil, Co-Chief Investment Officer at Birla Sun Life Mutual Fund, said in an interview with ETNow.

"In the event of a correction in the market, there is some amount of cash which could be deployed," he added.
He said only a fraction of inflows was received in the aftermath of Brexit, but domestic flows have been steady. Seeing the enthusiasm in retail investor participation since the global financial crisis of 2008, MFs are making all efforts to restore investor confidence.

Mutual funds added 12.61 lakh investor accounts, or folios, in June quarter to take the tally to a record six-year high of 4.89 crore. Retail investors accounted for 95 per cent of the total mutual fund (MF) folios, Amfi said in a report.

Folios held by high networth individuals (HNIs), or those investing Rs 5 lakh or more as defined by AMFI, crossed the 19 lakh mark. This segment added 1.05 lakh folios in the June quarter. HNIs preferred to invest mostly in equity, debt and balanced funds, Crisil Research pointed in a note last month.

Most of the mutual fund (MF) houses are mulling launch of more variants of systemic investment plans (SIPs) to attract investors. The variants include SIP top-ups and smart SIPs.

In July, equity and equity-linked saving schemes witnessed an inflow of Rs 2,506 crore while liquid or money market funds saw Rs 54,212 crore inflow and the income segment Rs 43,913 crore.

Liquids fund mainly invest in money market instruments such as certificates of deposits, treasury bills, commercial papers and term deposits, while income funds are a class of debt funds that invest in a combination of government securities.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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