Net fresh inflows into mutual funds touched a new high, increasing 27 per cent year-on-year (yoy) to ₹3.55-lakh crore in the financial year ended March 31, 2022 against ₹2.80-lakh crore in FY21, largely due to bullish equity market and record collection through new fund offers.
Inflows into actively managed schemes increased eight per cent to ₹2.31-lakh crore (₹2.15-lakh crore in FY21) as investors continued with systematic investment plan even as market remained volatile. SIP inflows at ₹1.25-lakh crore (₹96,080 crore) alone accounted for 35 per cent of the overall inflow into mutual fund schemes last fiscal.
Vidya Bala, smallcase Manager and Co-founder, PrimeInvestor.in, said low returns in fixed income space in the past two years and other fancied assets such as crypto currencies losing sheen pushed inflows into equity funds in the initial part of last fiscal as stock markets continued to show momentum.
However, she observed that the market started weakening since last October which led investors to initially buy on dips but continued weakness made matters worse since the Ukraine–Russia tension and they finally turned pessimistic since April 2022.
Passive funds gain
Interestingly, passive funds are fast gaining ground, registering 88 per cent jump in inflows at ₹1.23 lakh crore (₹65,308 crore), as per Morningstar data. The launch of new index-based exchange traded funds had attracted good interest from investors.
Kanika Agarrwal, Co-founder, Upside AI, said with an asset under management of ₹4.8-lakh crore, passive funds today account for 25 per cent of equity AUM at ₹14 lakh crore and this number was low single digits in 2019.
“The sharp jump in passive NFOs had a big role to play in drastic rise in inflows. As markets mature, flows tend to shift from active to passive funds. In the US, the passive fund AUM is higher than active funds. Sebi move to improve transparency and liquidity in passives should continue to drive flows,” said Agarrwal.
With highest-ever inflows in a couple of NFOs, SBI MF topped the table with net inflow of Rs 84,608 crore against Rs 70,089 crore registered in the previous fiscal. Axis MF came a distant second, recording an inflow of Rs 41,893 crore (Rs 38,838 crore) on strong inflows based on better performance in some of their schemes.
Abhinav Angirish, Founder, Investonline.in, said the common man has become more disciplined in his approach and has used SIPs as a preferred medium of investing to wade through volatile periods.
Indian investors have matured to the point that they are no longer shaken by market volatility and this was evident from the fact that retail investors managed to absorb part of FPI sell-off of $36 billion since last October. A decade ago this kind of selling would have resulted in a market crash, but the situation has changed now, Angirish added.