The sharp spurt in assets under management (AUM) in mutual funds in recent years appears to have compelled fund managers to venture out of their comfort zone and seek out new stocks to invest in. Such has been the rush into equity that the share of household gross financial savings in shares and debentures (including mutual funds) increased from 2.7% in financial year (FY) 2016 to 10% in FY17.
Equity funds (including balanced funds), in particular, have seen substantial inflows–totalling ₹ 5.18 lakh crore in the past five fiscals–compared with ₹ 0.2 lakh crore of outflows in the preceding five. This has improved mutual funds’ participation in equity markets, taking the ratio of equity AUM to market capitalisation up from 2.8% as of March 2014 to 6.4% as of February 2018.
