Markets

At ₹6.7 lakh crore, MFs absolute assets hit record high

Suresh P. Iyengar | Updated on: Jan 13, 2022
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Inflows, new fund offers shore up asset base

The mutual fund industry has recorded absolute asset growth of ₹6.70 lakh crore in calendar 2021, shattering the previous records of ₹4.80 lakh crore registered in 2017 and ₹4.5 lakh crore in 2020, according to a Crisil Research report. Absolute asset gain is the AUM difference in last two years minus the net inflow.

The overall assets under management of the industry also surged to a new high of ₹37.73 lakh crore, against ₹27.86 lakh crore logged in 2020.

NS Venkatesh, Chief Executive, Association of Mutual Funds in India, said last year was momentous with mutual funds emerging as the preferred investment destination and record equity flows in new fund offers and existing schemes.

‘Disciplined investing’

Over all, 2021 emerged as a year of disciplined investing through a rise in SIP (systematic investment plan), as investors understood the nuances of managing market volatility and risk adjustment through SIP, he added.

Though net flows in the last two years were at ₹1.81 lakh crore, equity funds caught investors fancy last year, while debt-oriented funds ruled the roost in 2020.

The net inflow into debt-oriented funds in 2020 came despite the liquidity crisis leading to an outflow of ₹1.94 lakh crore in March, the most since September 2018.

Passive funds remain in focus

Open-ended debt-oriented mutual funds saw inflow of ₹2.01 lakh crore during 2020, while equity-oriented funds saw a net inflow of just ₹9,100 crore. Hybrid funds also took a beating, with an outflow of over ₹53,000 crore. However, passive funds continued to garner money, amounting to ₹62,000 crore, led by flows from institutional investors such as the Employees’ Provident Fund of India.

In complete contrast, equity-oriented funds hogged the lion’s share of AUM of the domestic mutual fund industry last year. Equity funds witnessed net inflow of just ₹9,100 crore drawn by strong gains in the underlying equity market, while passive and hybrid funds gained traction to attract ₹1.14 lakh crore and ₹1.02 lakh crore, largely due to the launch of 49 new fund offers.

Debt mutual funds, on the other end, saw a net outflow of ₹35,000 crore in the last year as investors shied away from the category amid a fall in returns and possible interest hike by RBI. The upward movement in yields is expected to reduce the sheen of long-maturity debt funds.

Published on January 13, 2022

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