Indian two thousand and five hundred rupee banknotes (Photographer: Dhiraj Singh/Bloomberg)

India’s Mutual Fund Asset Base May Hit Rs 20 Lakh Crore Mark In June

India’s mutual fund industry is likely to hit the Rs 20 lakh crore mark in assets under management (AUM) next month, backed by a booming stock market and increasing interest from retail investors.

Moreover, investment by mutual fund players in the equity market has surpassed that of foreign institutional investors (FIIs), according to data from the Association of Mutual Funds in India (AMFI).

The AUM of the mutual fund industry grew 9.8 percent to Rs 19.26 lakh crore in April, from Rs 17.54 lakh crore in March, and it was likely to cross the Rs 20 lakh crore milestone in the next month itself if the assets grow by another 4 percent, according to AMFI data collated by rating agency Icra.

Of the Rs 1.5 lakh crore that investors pumped in different categories in April, liquid, income, and equity funds, including equity-linked savings schemes (ELSS), saw the highest inflows, it said.

The three categories saw net inflows of Rs 0.99 lakh crore, Rs 0.35 lakh crore and Rs 0.09 lakh crore, respectively.

Equity funds also got support from the broader market rally as the BSE Sensex hit an all-time high of 30,000 in April.

Equity funds (including ELSS) witnessed net inflows of Rs 9,429 crore in April, an increase of 14.8 percent month-on-month (MoM) and 112.5 per cent year-on-year (YoY). This comes on top of over Rs 70,000 crore investments in equities in 2016-17.

In April, net inflows via the systematic investment plan (SIP) route hit an all-time high of Rs 4,200 crore, the data showed.

According to AMFI, the industry added around 6.26 lakh SIP accounts every month on an average during the last fiscal with an average ticket size of Rs 3,660 per account.

MFs pumped in Rs 54,912 crore into the country’s equity market, as against Rs 52,977 crore by FIIs or foreign portfolio investors (FPIs) during the year gone by.

The trend continued in April where MFs' quantum of net investment in equities stood at Rs 9,918 crore compared with Rs 2,417 crore by FIIs or FPIs, the report said.

Total folio count at April-end grew 1.3 percent to 5.61 crore from March, according to Securities and Exchange Board of India (SEBI) data.

Folios are numbers designated for individual investor accounts, though one investor can have multiple accounts.

The growth was primarily on the back of 5.85 lakh new folios added to the equity category (including ELSS) and 1.5 lakh new folios to the balanced category.

Exchange-traded funds were the only category to witness a decline of 20,000 folios, which could be due to the category’s underperformance compared with the actively-managed funds, it added.

In the last 12 months, assets from beyond top 15 cities, or B15 towns, have grown 43.9 per cent due to investor-friendly initiatives by the regulator and awareness campaigns by asset management companies (AMCs).

The B15 assets grew Rs 98,525 crore to Rs 3.23 lakh crore in April from Rs 2.24 lakh crore a year ago.

Currently, B15 towns account for 16.9 percent of the total assets of the industry. However, the share of direct plans in B15 towns is only 22.3 percent, as against 45.6 percent in top 15 cities.