MF AUM hits a record of Rs 44.3 Trillion

The assets under management (AUM) of mutual funds is impacted by two factors. The first is the flows into mutual funds. These have been robust but varied month after month. The second factor that impacts the AUM of mutual funds is the stock market appreciation. That is something we have seen in plenty, especially after the very rapid rally we saw in the June quarter. The result is that the total assets under management (AUM) of all Indian mutual funds combined touched an all-time high of Rs44.3 trillion. The table below captures the growth in AUM of mutual funds on monthly basis.

Data Source: AMFI

Let us look at the overall picture and the specific categories. For the sake of simplicity, the AUMs of all categories other than active equity and active debt have been clubbed under alternate funds. These include hybrid funds, passive funds, and solution funds. Here are the key takeaways from the above table for the quarter to June 2023.

• Let us start with the overall picture. Between March 2023 and June 2023, the total AUM of all funds has spiked from Rs39.42 trillion to Rs44.39 trillion. That is a growth of 12.61% in just one quarter and this can be largely attributed to the market rally.
   
• Let us turn to the active debt funds. Between March 2023 and June 2023, the total AUM of active debt funds has spiked from Rs11.82 trillion to Rs13.48 trillion. That is a growth of 14.04% in just one quarter and this can be largely attributed to the strong inflows into active debt funds in the months of April and May 2023.
   
• What about equity funds? Between March 2023 and June 2023, the total AUM of active equity funds has spiked from Rs15.17 trillion to Rs17.43 trillion. That is a growth of 14.9% in just one quarter and this can be largely attributed to the to rally in the markets since the equity fund flows have been fairly moderate in the recent months.
   
• Finally let us turn to the alternate funds comprising of hybrid funds, passive funds, and solution funds. Between March 2023 and June 2023, the total AUM of these alternate funds has increased from Rs12.09 trillion to Rs13.22 trillion. That is a growth of 9.35% in just one quarter and this was due to a mix of strong flows into passive funds and both passive and hybrid funds benefiting from the stock market rally.

While the AUM of most of the funds appear to have grown, have their share of total AUM also grown in the process? The table below captures the picture over the last 3 months. Clearly, most of the growth has been triggered  by active equity funds, with the others either retaining their share or seeing their market share taper.

In the last 1 year, the equity funds and the alternate funds have increased their share of total AUM at the cost of active equity funds. However, that situation has slightly improved for the debt funds in the last 3 months after the sharp inflows in April and May 2023.

Debt funds see outflows in June, Equity flows bounce

Let us look at the specific categories of funds and how specific funds saw flows in June.

• After 2 months of strong inflows, debt flows saw net outflows of Rs14,136 crore in June 2023. This can be attributed to treasury pressures as corporates rush to pay their advance taxes by the middle of June.
   
• Within debt funds, money market funds and overnight funds saw net inflows of Rs6,827 crore and Rs4,628 crore respectively. On the sell side, it was the liquid funds that saw net outflows of Rs28,545 crore in June 2023.
   
• Net inflows into active equity funds more than doubled to Rs8,638 crore in June 2023. The push to inflows came from the NFOs, which was dominated in June by the equity oriented funds. Let us now turn to specific categories of equity funds and the flows.
   
• Small cap funds stole the show with Rs5,472 crore of inflows followed by value funds at Rs2,239 crore.  Ironically, large cap funds saw net outflows to the tune of Rs2,050 crore as there is a certain degree of ennui about large cap funds setting in and most investors are now finding index funds to be a better proxy at a much lower cost.
   
• Among the other key categories, hybrid funds saw net inflows of Rs4,737 crore. However, the macro picture glosses over the fact that the one fund category that determined the total flows was the arbitrage funds. In terms of net inflows, arbitrage funds saw net inflows of Rs3,366 crore and the only other category to see net inflows was the multi-asset allocation funds.
   
• Finally, let us turn to passive funds. The net inflows were modes at Rs2,057 crore compared to the impressive flows in the previous months. While index ETF saw net inflows of Rs3,402 crore, index funds saw net outflows of Rs906 crore. Other heads saw negligible flows in June 2023.

Read What is AUM in Mutual Fund

The big story for the month was the AUM of Indian mutual funds crossing the Rs44 trillion mark and is current at around $540 billion in terms of AUM. That makes the domestic mutual funds formidable in size and a good foil for the staid and conservative LIC as well as the aggressive FPIs.