Retail mutual fund AUMs, SIPs, and folios are at all-time high. Demat account numbers were also at record highs. Does this signal a strong retail trend?
The Indian mutual fund industry’s net assets under management (AUM) reached an all-time high of Rs. 39.33 lakh crore in August 2022. Mutual fund folios of retail investors also stood at a staggering Rs. 10.89 crore, while the monthly contribution of systematic investment plans (SIP), used mainly by retail investors, stood at Rs. 12,693.45 crore, also an all-time high.
The rise in the number of retail investments in mutual funds is not an isolated trend, as the stock market is also experiencing a similar trend. According to Central Depository Services (India) Limited (CDSL), the total number of demat accounts grew from 2.5 crore in August 2020 to 7.16 crore in August 2022.
N.S. Venkatesh, CEO of the Association of Mutual Funds in India (AMFI), said: “Monthly SIP Contribution, SIP AUM, SIP folios, overall mutual fund folios, and AUMs, all at an all-time high coupled with continued positive flows in most categories of mutual fund schemes, signify rising and informed investment preference towards Mutual Fund asset class. Investors continue to stay fully invested and also adhere to goal-based investing.”
The mutual fund SIP AUM was at Rs 6.39 lakh crore and is currently about 16 per cent of the total industry’s AUM. This SIP AUM figure is also at an all-time high.
Venkatesh said in a press conference that this trend signifies a healthier and more disciplined approach to investments opted for by small investors.
He further added that the retail investor’s share of AUM in the overall industry is more than 50 per cent presently, which “signifies retail’s continued interest in the mutual fund asset class.”
About 21.13 lakh new mutual fund SIPs were registered during August 2022.
The monthly SIP investment contribution for August was Rs 12,693.45 crore compared with July’s figure of 12,139.79 crore, an increase of 4.56 per cent or Rs 553.66 crore.
Amar Ranu, head, Investment products and advisory at Anand Rathi shares and stock brokers, said, "Despite FIIs pulling out money till June 2022, retail investors showed patience and remained invested or continued with their SIPs or lumpsums."
Ranu further addd that this shows the smartness among retail investors who continue to have faith in long term wealth creation via investing in the markets.
On a YoY basis, the retail mutual fund folio number has risen about 22 per cent, and AMFI said in a release that about 1.94 crore folios were added in the last 12 months to August.
According to AMFI data, in the equity/growth category, the top 5 schemes that generated the highest net inflow were Flexi cap (about Rs. 2099 crore), Mid-Cap (about Rs. 1479 crore), Small-Cap (about Rs. 1259 crore), Large and Mid-Cap (about Rs. 1030 crore) and focussed funds (about Rs. 886 crore).
"Real Estate and Gold have not been doing well in the past though the former just started picking up transactions. Because of this, the money has been flowing into equity and leading to all time high participation from retail investors," added Ranu.
The biggest net outflow of funds was witnessed in sectoral/ thematic funds at about Rs 1266 crore. For the overall growth/equity-oriented schemes, an overall net inflow of about Rs 6,119 crore was observed.
According to Umesh Kumar Mehta, chief investment officer, Samco Mutual Fund, "Today unique pan mutual fund investors in India are around 3.5 crore which still is a highly under penetrated number and needs an aggressive push to increase the width of the market. So the current growth is steady run rate happening due to increasing wallet share and rising asset prices, but this rate can significantly accelerate if more investors join the main stream financial markets."
In the hybrid fund category, there was a net outflow of about Rs 6601 crore, with arbitrage funds alone witnessing a net outflow of about Rs 8548 crore. Rest all the other hybrid funds saw a net positive inflow with dynamic asset allocation/ balanced advantage funds leading with about Rs 850 crore net inflow. The equity savings fund received the lowest net inflow at Rs 22 crore.