Mutual Fund Assets Surge to Record High in FY24

Mutual Fund Assets Increase 34% during FY24

The assets managed by domestic mutual funds (MFs) rose by 34 per cent during the fiscal year 2023-24 (FY24) — the most since 2016-17 — propelled by a sharp rally in the equity market and robust inflows. This growth is a positive sign for the industry, which primarily caters to retail investors.

Steady Growth in Assets Under Management (AUM)

For the three months ended March 2024 (Q4FY24), the average assets under management (AUM) stood at Rs 54.1 trillion compared to Rs 40.5 trillion in Q4 of 2022-23 (FY23), according to data from the Association of Mutual Funds in India. This marks the 12th consecutive year of AUM growth for the industry.

Although the MF industry has made significant progress, its AUM still represents only around a quarter of the total deposits with banks. However, the industry has shown consistent growth over the years and is gaining traction among investors.

Key Players in the Industry

The largest fund house, SBI MF, maintained its lead with an average AUM of Rs 9.1 trillion in Q4, 27 per cent higher than the same quarter of FY23. Among the top 10 fund houses, Nippon India recorded the fastest growth, with its average AUM surging by 47 per cent to Rs 4.3 trillion. In the top 15, Tata MF led with nearly a 50 per cent average AUM gain.

It is important to note that MF AUM moves depending on investor flows and market movements. In FY24, the equity market witnessed a stellar rally, with the benchmark National Stock Exchange Nifty 50 rising by 29 per cent, marking its best performance since the pandemic-affected 2020-21. The broader market, including Nifty Smallcap 100 and Nifty Midcap 100, also experienced significant gains of 70 per cent and 60 per cent, respectively.

Inflows and Investor Sentiment

On the inflow front, MFs received a net of Rs 5.1 trillion in the first 11 months of FY24. Actively managed equity schemes attracted Rs 1.6 trillion of these inflows. The gross inflows through the systematic investment plan (SIP) route amounted to Rs 1.8 trillion during the April 2023-February 2024 period, 15 per cent higher than the FY23 tally. The flow data for March is due to be released next week.

Judging by MFs’ record equity market deployment in March, the industry is expected to have seen a sharp surge in equity scheme inflows. This indicates positive investor sentiment and confidence in the market.

Overall, the mutual fund industry has shown impressive growth in FY24, with a significant increase in AUM and strong inflows. The industry’s performance is closely tied to market trends and investor sentiment. As the economy continues to recover and the equity market remains favorable, mutual funds are likely to attract more investors and witness further growth in the coming years.