India’s mutual fund industry has made significant strides in recent years amid growing investors’ interests buoyed by positive market momentum and economic outlook.
In its monthly report for July 2023, the Association of Mutual Funds in India (AMFI) states record growth in mutual fund folios, reaching an all-time high of 15,14,21,270.
On the other hand, the net asset under management (AUM) was Rs 46,37,565 crore, while the average AUM (AAUM) was Rs 46,27,687 crore in July.
Commenting on the industry’s positive momentum, AMFI CEO N.S. Venkatesh says: “The surge in retail investors’ interest in mutual funds has translated into impressive inflows across scheme categories. The star performer this month has been Systematic Investment Plan (SIP), with an impressive 33,06,337 new SIP accounts registered and a record Rs 15,245 crore of monthly contribution.
“Moreover, the industry’s AUM has grown by 25 per cent YoY, underscoring mutual funds’ significance in financialisation of savings. The substantial increase in SIPs is a result of mutual fund houses and AMFI’s widespread awareness campaigns.”
Venkatesh adds, “Investors in B30 cities are indirectly investing in stock markets via SIPs in equity mutual funds. Short-term debt fund inflows continue due to treasury management by banks and corporates, while hybrid categories like multi-asset allocation funds have seen increased investor interest.
“Investors are increasingly realizing that mutual funds have various options suited for their risk profile and goals and that they can partake in the India growth story by investing as little as Rs 500 a month.”
Key Highlights Of AMFI Report
• Mutual fund folios reached an all-time high of 15,14,21,270 in July 2023 compared to 14,91,31,708 in the previous month.
• Retail MF folios (equity, hybrid, solution-oriented schemes) also at an all-time high at 12,08,50,415 in July 2023 compared to 11,90,63,434 in June 2023.
• Retail AUM (equity, hybrid, solution-oriented schemes) stood at Rs 24,17,268 crore, with an average AUM of Rs 23,77,395 crore.
In addition, 17 schemes, all in open-ended category, were launched in July, raising Rs 6,723 crore. SIP contribution stood at Rs 15,244.73 crore in July, an all time high, while the number of SIP accounts stood at 6,80,52,826, the highest ever, compared to 6,65,37,033 in June.
Stock Market Trends
The July data comes amid a surge in Demat account opening. A total of three million new demat accounts were opened in July 2023, highest in 18 months. Economic growth, renewed infrastructure and real estate development, younger population, and more awareness about benefits of investing for long-term growth spurred retail investment in equity.
Commenting on demat account growth, Abhijit Talukdar, a Mumbai-based Sebi registered investment advisor, says that despite a positive momentum in demat account opening, the stock market penetration in India is “abysmally low”.
Talukdar says, “Stock market penetration remains abysmally low in India at less than 5 per cent, compared to 13 per cent in China, 33 per cent in (the) UK and 55 per cent in USA. India has therefore still got a long way to go, before more of the population participates in the stock market directly. Indian economy being on a growth trajectory for the foreseeable future, it is natural to expect that the stock markets will follow the same trajectory also.
“Hence, if the number of new demat accounts keeps increasing month-on-month, this will enable more retail investors to participate in and benefit directly from the growth in the Indian economy.”
Adds Kartik Parekh, a Sebi-registered RIA, “Investing is becoming a way of life; youngsters are become more and more aware of saving and investing to grow their money. This is also owing to the fact of digitalization.
According to data from the two depositories, CDSL and NSDL, the 3 million demat account opening in July is the highest since January 2022 and about 50 per cent more than the previous 12-month average of 2 million.