Mutual Fund Investment in India: AUM Trends and Investor Behavior in March

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Mutual Fund Investment in India: AUM Trends and Investor Behavior in March
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In March, the Indian mutual fund industry experienced a slight uptick in its assets under management (AUM), which rose by 1% month-on-month (MoM) to reach INR 55 lakh crore. This growth was primarily driven by robust inflows from individual investors via systematic investment plans (SIPs). However, the positive momentum was somewhat dampened by a sell-off in mid- and small-cap stocks during the same period.

Year-on-year (YoY), the AUM has surged by an impressive 37%, and it stands 123% higher compared to the post-pandemic lows. A significant highlight for March was the net SIP inflows, which hit a record high of INR 19,271 crore, marking a 0.4% increase MoM. For the fiscal year 2024 (FY24), average monthly SIP inflows amounted to INR 16,602 crore, a notable 28% rise from INR 12,935 crore in FY23. This robust SIP inflow underscores a growing investor confidence in the mutual fund route. SIP AUM has now reached INR 10.7 lakh crore, accounting for nearly 20% of the total industry AUM.

Conversely, the AUM for close-ended schemes saw a decline of 3.4% MoM, standing at INR 28,043 crore, which represents a mere 0.5% of the total mutual fund AUM.

A significant portion of the mutual fund AUM is actively managed. Of the INR 55 lakh crore total AUM as of March 2024, approximately INR 45 lakh crore, or 82%, was actively managed. Within the pure equity AUM segment, which totals INR 28 lakh crore (accounting for 51% of the overall MF AUM), passive equity funds comprised INR 4.6 lakh crore, reflecting a 4.3% MoM decline. Notably, exchange-traded funds (ETFs) made up 88% of the passive equity funds. Meanwhile, active equity funds saw a modest increase of 1.2% MoM, reaching INR 23 lakh crore.

The total debt AUM was INR 16.5 lakh crore by the end of March, showing a 1.2% MoM decrease and constituting 30% of the overall AUM. Of this, only 12% (INR 2 lakh crore) was managed passively, with the remaining INR 14.6 lakh crore being actively managed, albeit with a 1.3% MoM decline.

Hybrid funds exhibited a positive trend, with their AUM rising by 2.2% MoM to INR 7.5 lakh crore in March. This category has been on an upward trajectory for nine consecutive months, increasing its share to 13.6% of the total AUM from 13.4% in the previous month. Over FY24, the AUM for active equity and hybrid funds surged by nearly 49%, whereas active debt funds grew by a modest 8%.

This comprehensive analysis highlights the dynamic nature of the Indian mutual fund landscape, driven by strong SIP inflows and a predominant preference for actively managed funds across equity and debt segments.

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