Amid strong bull-run, MFs close gap with bank deposits
Equity AUM alone jumped 48% to ₹39-lakh crore last fiscal
Thanks to an uninterrupted bull run and renewed interest in equity investment, the quantum of assets under management of the mutual fund industry accounts for 26 per cent of bank deposit as of March-end against 21 per cent logged in FY23.
While bank deposits increased 13 per cent last fiscal to ₹205-lakh crore, the mutual fund industry registered 35 per cent growth in AUM to ₹53.40lakh crore on the back of a sharp increase in inflow and the addition of investors.
The equity AUM alone has jumped 48 per cent to ₹39-lakh crore (₹26.60-lakh crore) even as the inflows dipped 22 per cent to ₹2.37lakh crore (₹3.02-lakh crore).
The number of unique investors (identified by PAN number) added by the MF industry has increased by 69 lakh or 18 per cent to
The industry has managed to extend its reach beyond top-30 cities to attract new investors, especially through the monthly systematic investment plan
4.46 crore in FY24. Of the overall AUM of the MF industry, individual investors account for 61 per cent against 58 per cent in FY23 while institutional investors’ share was down at 39 per cent against 42 per cent, according to Franklin Templeton’s study.
SYSTEMATIC PLAN
With the sharp run in equity markets, the industry has managed to reach beyond top-30 cities to attract new investors, especially through the monthly systematic investment
plan. The SIP inflows were up 28 per cent at ₹2lakh crore (₹1.56-lakh crore) with a 98 per cent increase in new SIP accounts to 42.87-lakh (21.65 lakh) in FY24.
Palka Arora Chopra, Director, Master Capital, said one of the drivers behind new investor additions is the adoption of SIP, which allows investors to contribute a fixed amount at regular intervals, rather than pumping in a lump-sum in one go.
The use of online mode to reach out to young investors and GenZ in rural areas to tap the equity market through small SIPs of as low as ₹500 per month has made MF investments more inclusive and appealing to a broader segment of the population, especially first-time investors, said Chopra.
While market conditions may impact investor sentiment, low penetration amid the inherent strengths of SIPs, such as discipline, convenience and long-term wealth-building potential, are likely to sustain the momentum of new investor additions in the years to come, she said.
Riding on the bull run, the investment attracted by the industry through new fund oer increased 9 per cent last fiscal to ₹68,038 crore against ₹62,342 crore in FY23.
CORE THEME
Interestingly, equity remained the core theme of NFOs. Of the overall NFO flows, 89 per cent or ₹60,336 crore of the schemes were in equity.