The mutual fund industry in India experienced a significant resurgence in 2023, with its asset base climbing by nearly Rs 11 lakh crore, breaching the Rs 50 lakh crore mark. This surge was fueled by an optimistic equity market, increased awareness regarding financial stability, and robust economic growth.
The Association of Mutual Fund Industry (Amfi) highlighted this achievement against India's growth backdrop, showcasing the industry's capability to earn investor trust by offering low-cost, long-term avenues for wealth creation.
The year 2023 witnessed a substantial overall inflow, reaching Rs 2.74 lakh crore, notably supported by the rising popularity of Systematic Investment Plans (SIPs), attracting Rs 1.84 lakh crore.
The inflow led to a 27 per cent surge in the assets under management (AUM) of the mutual fund industry in 2023, adding Rs 10.9 lakh crore. This was a significant increase compared to the 5.7 per cent growth and Rs 2.65 lakh crore rise in AUM observed in 2022 and the nearly 22 per cent growth and close to Rs 7 lakh crore addition in 2021.
The AUM rose from Rs 39.88 lakh crore in 2022 to an all-time high of Rs 50.78 lakh crore in 2023, compared to Rs 37.72 lakh crore in December 2021 and Rs 31 lakh crore in December 2020.
The growth marked the 11th consecutive yearly rise in the industry's AUM, primarily supported by equity scheme inflows, especially through SIPs.
While it took almost 50 years to accumulate the first Rs 10 lakh crore of AUM, the industry amassed the last Rs 10 lakh crore from Rs 40 lakh crore to Rs 50 lakh crore in just over a year, indicating its accelerated growth.
The industry experienced a net inflow of Rs 2.74 lakh crore in 2023, compared to over Rs 71,000 crore in the preceding year. This surge could be attributed to sustained interest in equity funds, arbitrage funds, index funds, and ETFs.
Flows in 2023 comprised Rs 1.61 lakh crore in equity-oriented schemes, over Rs 87,000 crore in hybrid schemes, while there was an outflow of Rs 46,000 crore in debt schemes.
Investors demonstrated confidence in SIPs, with inflows reaching an impressive Rs 1.84 lakh crore in 2023, surpassing the amounts for the previous three years. Monthly SIP inflows exceeded Rs 17,000 crore in the last two months, reflecting consistent retail participation through disciplined investment.
Gold also witnessed an inflow of nearly Rs 2,200 crore as it serves as a hedge during market volatility, adverse economic scenarios, and geopolitical events. The ease of digitization and access to a wider range of products have made Gold ETFs an attractive option for investors.
(With PTI inputs)
