Mutual Funds Industry August 2021: Increased Investor Confidence

Mutual Funds Industry August 2021: Increased Investor Confidence

Anecdotal evidence indicates that markets are heating up but certainly for not for the Mutual Funds (MF) industry; there is substantial financial appetite among Indian investors and, as a result, MF industry is scaling new peaks. For the first time ever, the net asset under management (AUM) for the Indian Mutual Fund Industry breached Rs. 36 lakh crore milestone in August 2021.

Within a short period of the last 5 months in FY22, the MF industry has added a massive 80 lakh folios (In FY21, the MF industry added 74 lakh folios between April 2020 to March 2021).

More importantly, monthly SIP contribution has touched Rs. 9,923.15 crore, an all-time high number as well. A massive rise in newly registered SIPs (record high of 4.32 crore SIP accounts) during August 2021 contributed to the growth of the MF Industry; by comparison, in August 2020, SIP accounts stood at 3.30 crores.

Retail participation has increased a great deal as well. Retail AUMs, at an all-time high at Rs 17.15 lakh crores, now form 46.87% of total Industry AUMs at Rs 36.59 lakh crore.

SBI MF Balanced Advantage Fund NFO, a hybrid fund, was hugely successful among the investors; this also demonstrates that investors in India are opening up to new options in terms of managing their money. N S Venkatesh, Chief Executive, AMFI, said that generally positive flows in the open-ended MF schemes and all-time high market indices have contributed enormously to the MF industry and that is why MF industry was able to breach the net AUM milestone of Rs 36 lakh crore in August 2021.

Out of Rs 36 lakh crore, retail AUM is Rs 17.15 lakh crores which is almost half of total Industry AUM. Within the retail AUM, SIP AUMs which forms almost a third of retail AUM: At Rs 5.26 lakh crores. This affirms that Mutual funds as a long-term wealth creation avenue are being considered as effective investment options; it also reflects a rising retail preference towards MFs. The retail investor is maturing up. AMFI’s top brass reaffirms this view as well: “Affinity towards Thematic/Sectoral and diversified Flexicap schemes since the start of the new fiscal FY22, including through SIPs, has overshadowed profit-booking during the last few months’.

Why have these numbers jumped so rampantly? Increased investor interest is one factor. If one compares the number of unique investors added in the last 5-6 months to the ones added in the last two years, then it becomes clear; the numbers are similar. Technology is another factor. Digital platforms have made it very easy for retail investors; they seem to have gained confidence over the digital medium.