Mutual funds’ assets under management surge by 41 per cent

NEW DELHI: Reflecting the massive inflows of wealth into the Indian stock markets seen over the second half of the previous financial year 2020-21, Indian mutual funds recorded a massive 41 per cent year-on-year increase in their assets under management (AUM) for the full financial year. 

According to the industry data collated by Crisil Ratings, the MF industry’s AUM stood at Rs 31.43 lakh crore at the end of FY21. The sharp increase comes even though this number registered a marginal 1 per cent decline in March 2021 after a renewed surge in Covid-19 cases increased investor pessimism and resulted in heightened market volatility. 

The 1 per cent decline in March was primarily driven by net outflows from open-ended debt funds, even though open-ended equity funds for the first time in June 2020 recorded net inflows, Crisil pointed out. 
Open-ended debt funds record highest on-year net outflows of Rs 52,528 crore in March, the worst seen since the Rs 1.95 lakh crore hit recorded in March 2020. Within the category, liquid funds witnessed the highest outflows of Rs 19,384 crore, followed by low duration funds at Rs 15,847 crore.

However, corporate bond funds, which invest in an underlying portfolio of top-rated papers, emerged as the biggest attraction with net inflows of Rs 69,305 crore, while  credit risk funds saw the highest net outflows of Rs 28,923 crore.

Equity funds, however, saw the first net inflows in eight months, with assets hitting a fresh high with net inflows of Rs 9,115 crore following eight straight months of net outflows. Last minute tax-saving investments also favoured equity funds, with equity linked savings scheme recording net inflows of Rs 1,552 crore in the month, the second highest net inflows in the broad segment.

Thematic funds turn market favourites
During fiscal year 2020-21, sectoral and thematic funds recorded the highest net inflows of Rs 9,801 crore, while large-cap funds saw the highest net outflows of Rs 10,587 crore, as investors fretted about costly valuations after the recent sharp run-up in stock prices