Investment in equity mutual funds surged over five-fold to Rs 94,151 crore in the June 2024 quarter against Rs 18,358 crore a year ago, driven by a strong economic environment, supportive government fiscal policies, investors confidence and robust stock return.
This has also pushed the industry’s assets under management (AUM) by 59 per cent to Rs 27.68 lakh crore in June from Rs 17.43 lakh crore a year ago, data from the Association of Mutual Funds in India (AMFI) showed.
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The robust gain in the asset base was also replicated in the growth of investors in equity mutual funds, with the number of folios closing at 13.3 crore, adding an investor base of over 3 crore.
The significant gain in equity folios indicates broader participation across investor segments, driven by improved financial literacy and accessible investment platforms, Trivesh D, COO of stock trading platform Tradejini, told PTI.
According to the AMFI data, equity-oriented mutual fund schemes invested Rs 94,151 crore in the quarter ended June 2024. This comprises Rs 18,917 crore in April, Rs 34,697 crore in May and Rs 40,537 crore in June.
The investment in equity-oriented mutual funds jumped five-fold to Rs 94,151 crore in the June quarter from Rs 18,358 crore in the quarter ended June 2023 and increased 32 per cent Rs 71,280 crore witnessed in the preceding March 2024 quarter.
“The confluence of political stability, supportive government policies, and a favourable economic environment has significantly contributed to the impressive inflows into equity mutual funds, signalling a positive outlook for the sector,” Trivesh said.
Strong macroeconomic fundamentals, bolstered by supportive government fiscal policies like higher-than-budgeted tax collection growth, reduced revenue expenditures, and increased capital spending have helped in increasing the allocation to equity mutual funds, Feroze Azeez, Deputy CEO, Anand Rathi Wealth, told PTI.
He further said that investors’ confidence in the markets and historically strong returns given by Indian equities with relatively low risk also helped investors to move towards equity mutual funds.
Additionally, the shift was further fuelled by a transition from traditional investments like deposits to mutual funds in pursuit of higher returns.
“The long-term outlook remains positive, with expectations of 11-13 per cent annual returns for Indian equities, and equity mutual funds potentially delivering even higher returns,” Azeez said.
Within the equity segment, sectoral or thematic category attracted Rs 46,731 crore during the quarter under review, followed by Multi-cap (Rs 10,077 crore), Flexicap (Rs 8,387 crore), Large & Midcaps (Rs 7,948 crore), Smallcap (Rs 7,197 crore) and Midcap (Rs 6,927 crore).
Large-cap funds witnessed an infusion of Rs 1,991 crore during the April-June quarter of the current financial year (FY25).
Moreover, inflows into the systematic investment plan (SIP) have been rising continuously for the past several months.
The monthly SIP contributions crossed the Rs 21,000 crore mark in June, with the total inflow reaching an all-time high of Rs 21,262 crore. This shows investors’ commitment to disciplined and long-term investing.
The fund infusion through the SIP route was Rs 62,537 crore in the April-June quarter of FY25, a remarkable surge from Rs 43,211 crore in the same quarter preceding the fiscal.