MF industry’s AUM inches closer to Rs 28 lakh crore

Year 2020 has started on an encouraging note for the MF industry. As on January, AUM of the MF industry has grown to Rs 27.85 lakh crore.

Among equity schemes, mid cap funds witnessed the highest net inflows. In January, net inflows in mid-cap schemes rose by 126% to Rs 1,798 crore from Rs 796 crore in December. Next in the list was multi cap funds with net inflows worth Rs.1,722 crore as against Rs.511 crore in December.

Small cap funds also emerged to be one of the sought after categories after witnessing net inflows of Rs.1,072 crore in January compared to Rs.421 crore in December.

Industry experts attribute these inflows to attractive valuations in the mid-cap and small-cap space.

Vishal Kapoor, CEO, IDFC AMC said, “Within the equity space, small-cap, mid-cap and multi-cap categories more than doubled their inflows as against December, indicating investor willingness to look at categories which have had substantial price correction and where valuations are lower than historical averages.”

“While the small-cap funds have not been in favour during the last few months, the recent market rally seems to have driven the inflows into small and midcap fund inflows. As a result, the small cap AUM has also seen the biggest jump in the last 9 months. With the Union Budget 2020 and subsequent RBI policy leading several structural changes, we will continue to stay optimistic on the market outlook. The retail investors may continue investing in the markets through SIPs, while staying balanced in their investing approach between different asset classes." says Sundeep Sikka, ED and CEO, Nippon Life India Mutual Fund.

Overall, the total equity net inflows grew by 75% to Rs 7,877 crore in January from Rs 4,500 crore in December. 

Data available on SIP also remained encouraging. Monthly SIP flows rose to a record Rs 8,532 crore in January from Rs. 8,518 crore in December. Total SIP AUM rose to an all-time high of Rs.3.25 lakh crore.

NS Venkatesh, CEO, AMFI said, "Amid market volatility, positive net inflows in all categories of open-ended schemes and growing retail monthly SIP contribution touching all-time high is a thumping recognition of the retail investor acceptance of mutual funds as a long term wealth creation avenue. We expect 15-20% growth for the industry this fiscal."

Debt funds witnessed an inflow worth Rs 1.09 lakh crore in January, driven primarily by inflows in liquid funds and overnight funds. Liquid funds saw a net inflow of Rs 59,682 crore while overnight funds witnessed an inflow of Rs 22, 652 crore in December.

G Pradeepkumar, CEO, Union MF said, “One of the noticeable trends is a shift away from liquid funds toward overnight funds.  With the introduction of exit load in liquid funds and certain additional restrictions that will come into effect from 1st April 2020 we expect this trend to continue.”

Categories like ultra-short duration fund, low duration fund, money market fund and banking & PSU funds continued to receive good inflows. Fund managers attribute these inflows to investors’ continued preference for high quality and short-end categories having minimum credit and duration risk.