In recent years, India's mutual fund industry has witnessed a remarkable surge in investor participation. The industry's total assets under management (AUM) have grown significantly, and more and more new investors are joining in. According to the data released by the Association of Mutual Funds in India (AMFI), the mutual fund industry's net AUM is Rs 46,57,755 crores, while the average AUM stands at Rs 47,79,015 crores for September 2023.
One remarkable achievement in this growth is that the mutual fund industry has attracted over 4 crore unique investors. This milestone shows that a lot of everyday people in India are actively taking part in the stock market through mutual funds. "The Mutual Fund industry crossing the 4 crore unique investors mark is a testament to Indian retail investors' participation in equity markets through the Mutual Fund route," says N.S. Venkatesh, chief executive officer, AMFI. He further adds that the mutual fund industry's growth has been on an upward trend. "The half-yearly growth has been encouraging, and we are optimistic that the trend will continue to grow," he said.
The systematic investment plan (SIP) is an excellent indicator of retail participation and is the most preferred choice of retail investors to invest in mutual funds. Currently, the monthly SIP inflow is at Rs 16,042 crore, the highest ever recorded. According to the latest AMFI data, retail MF folios (Equity + Hybrid + Solution-Oriented Schemes) are also at an all-time high at 12.54 crore for September 2023 compared to 12.30 crore in August 2023. Interestingly, more than 50 per cent of AUM come from retail investors, which stands at 25.40 lakh crore.
In terms of inflow, equity-oriented funds continued to witness net inflows in September, marking it the 31st consecutive month of net inflows. The segment saw net inflows of Rs 14,091.2 crores in September 2023, lower than what it witnessed in the previous month, Rs 20,245.26 crores.
Among the equity asset class, the sectoral/thematic funds saw the highest inflows to the tune of Rs 3,146.8 crores during the month. The spike in the flows of this category could also be attributed to the fact that there were 4 new fund launches in this category, which cumulatively garnered Rs 1,629 crores during September.
Notably, despite being a festive month, the quantum of net flows in Gold ETFs fell to Rs 175.29 crores in September from Rs 1,028.06 crores it witnessed in August. Interestingly, the net flows witnessed by Gold ETFs in August 2023 were the highest in over 17 months. "With the continued hike in interest rates in the US, inflation still higher than expectations, and growth rate slowing down, the appeal of gold as a safe haven and hedge against inflation is expected to continue. Moreover, gold prices in recent times have come off from their all-time high levels, thereby providing some buying opportunity, particularly after a sharp rally since March this year," says Melvyn Santarita, Analyst – Manager Research, Morningstar Investment Adviser India.
Even in the face of global challenges, the Indian markets have demonstrated remarkable resilience, largely due to the strong influence of Domestic Institutional Investors (DIIs) driving the market's growth. This will likely keep the investors' participation in MF at a higher level.